ChatterBank2 mins ago
Starting a company
4 Answers
I have several buy to let properties, and I want to form a company for tax reasons, and to generally organise things a bit better. Can anybody recommend a good book/website to help me along?
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I'd regard 'several' as perhaps two or three and with that number of properties I wouldn't have thought it was worth it? If you had upwards of maybe 10 or 20 properties it might be worth considering but the yield on only a handful of properties must be so low as to be not worth forming a company for.
One of the benefits of a company is that you can pay yourself via dividends which is a tax saving but, unless your yield (profit) is extraordinarily high, or you have a large portfolio, the amount you could take out via dividends would be minimal.
The actual process of registering a company is straightforward but you will have to submit accounts to Company House every year and be liable for corporation tax etc on any profits and you make. You'd still have to declare anything you take from the company on your self assessment tax return anyway so it would seem like extra paperwork to form a company at this stage with little benefit.
You would also need to consider the legal position of a limited company letting out the properties. Off the top of my head I'm not sure that a limited company can offer an Assured Shorthold Tenancy and that might create difficulties with any troublesome tenants in the future (in that you wouldn't be able to evict them so easily).
That's just my two pence worth from someone who has buy to let properties and also a company for a separate business.
One of the benefits of a company is that you can pay yourself via dividends which is a tax saving but, unless your yield (profit) is extraordinarily high, or you have a large portfolio, the amount you could take out via dividends would be minimal.
The actual process of registering a company is straightforward but you will have to submit accounts to Company House every year and be liable for corporation tax etc on any profits and you make. You'd still have to declare anything you take from the company on your self assessment tax return anyway so it would seem like extra paperwork to form a company at this stage with little benefit.
You would also need to consider the legal position of a limited company letting out the properties. Off the top of my head I'm not sure that a limited company can offer an Assured Shorthold Tenancy and that might create difficulties with any troublesome tenants in the future (in that you wouldn't be able to evict them so easily).
That's just my two pence worth from someone who has buy to let properties and also a company for a separate business.
HMRC does a book on property letting. It's about a centimetre thick, their leaflets are normally twenty pages max - that's how detailed this area of taxation is! I'd definitely get a copy of it if I were you. It'll help you no end with your tax returns.
I'd also get an accountant to check over your figures to check you're not doing yourself short on the tax return you'll need to fill in. If you keep your own books well, they won't charge much for the service.
I'd also get an accountant to check over your figures to check you're not doing yourself short on the tax return you'll need to fill in. If you keep your own books well, they won't charge much for the service.
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