If you are looking to buy an investment buy-to-let property, then you are probably trying to figure out. At Fabrik we pretty much consult every investor to setup property into a company and the reasons are mostly tax related.

Ultimately most landlords and property investors don’t need the rental income to supplement their income, therefore having the property in a company makes sense as there is a lot more you can do with the money before paying forced to pay 40%-45% tax.

Additional income Tax

If you already have a salary or some form of income as an individual, then adding any additional income from a property you own in your own name may likely push your personal income above the tax threshold which currently stand at £50,271 for 40% tax and 45% for over £150,000.

If you held property in a company, then the only tax you will need to pay is corporate tax on the NET profits.

Private Pension Payments

If your property is in a company that you own, then you can effectively put every penny into a private company pension (Sass). This means you won’t be paying any tax on your rental property income.

Borrowing from Company Pensions

If you have a financial advisor helping you with a company, they may be able to advise you ways of borrowing money from this pension to re-invest, meaning you can simultaneously avoid tax and re-invest the money. We are not financial advisor, and this is based on our own experienced. We strongly recommend you speak with financial experts regulated by the FCA.

Deductible expenses

If you own a property in a limited company you will be able to deduct far more from your taxable profits. The biggest of which will likely be the mortgage.

Transferring ownership

If you own a property yourself then when its time to give part or all the property to a loved one (often a child or spouse) there will be inheritance Tax. However, if it is structured as a company then you can simply transfer the shares which if done correctly can be completely tax free.

Building a Property Portfolio

If you are looking to build a portfolio of properties then owning through a Limited company will make more sense than just one, for all the reasons above, from tax structure, re-investing profits to inheritance.