Limited Company Buy to Lets

The 2020 Budget saw additional changes in tax relief for buy-to-let landlords

Written by: Category: Landlords January 31, 2024

Buy To Let In Limited Companies

As incorporated businesses do not face the same level of tax relief restrictions as other entities or organisations, it is easy to see why using this mechanism to purchase property is a popular choice for many would-be landlords.

Also, the 2020 Budget saw additional changes in tax relief for buy-to-let landlords, which caused many investors to re-evaluate their options.
It is easy to see why many people are interested in this method of investing in rental property, but there are pros and cons of doing so. Also, you must carry out the process correctly, which is why it makes sense to call on an industry expert to ensure you meet all administrative obligations.

Advantages of buying to let with a limited company

All of the reasons mentioned below are worth considering, as they make purchasing rental property via a limited company appealing.

There is a higher level of tax relief

One of the most significant issues for landlords in recent years has been the lowering of tax relief for landlords. This doesn’t apply to limited companies. A landlord who is a top-rate taxpayer who runs their rental business as a Limited Company will pay a lower rate of tax than they would do if they did so individually.

No income tax when reinvesting profits

Many BTL investors look to reinvest their profits into expanding their rental property portfolio. Doing so grants access to a lower level of tax, paying corporation tax as opposed to the income tax rate, and this can help investors expand their portfolio at a faster pace.
You can draw personal funds out of the limited company. An investment into the limited company, which includes the mortgage deposit, can be taken out of the company if it is classed as a director’s loan. Please review your mortgage terms and conditions to ensure this is applicable to you, but it is an option for many BTL investors.

A more straightforward change of ownership

If you are looking to keep your options open, buying to let via a limited company is helpful. The company owns the rental property, and shareholders and directors can be changed freely. Therefore, if it suits you, you can add or remove owners and partners as you desire.
It is much easier to change the ownership of the company, at Companies House, than changing property ownership by selling the property.

The limited company owns the property

For many individuals, having the property owned by the limited company, as opposed to being in your name, is advantageous. Many landlords have suffered due to utility companies and even local councils hounding them for debt run up by tenants.

However, when a limited company is stated on the Land Registry document, the owner holds more privacy, and the chances of being hounded for debt is smaller.
At Vital Space, we appreciate there is considerable uncertainty at these times, and vendors want clear guidance. We are more than happy to provide as much assistance and information as you can. We can be contacted in many ways, which means you can connect with us from the comfort of your own home.

If you need any assistance, please contact VitalSpace today.

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