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Sam, Accountant
Category: Tax
Satisfied Customers: 13887
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I bought a rental house last year to take advantage of my wifes

Customer Question

I bought a rental house last year to take advantage of my wifes tax free allowance. I'm going to buy a few more rental properties as an investment. Any idea what the most tax efficient way of doing this is?

Would it be Ltd company with my wife as the sole director
Submitted: 4 years ago.
Category: Tax
Expert:  Sam replied 4 years ago.

Thanks for your question

In whose name is XXXXX XXXXX?


Customer: replied 4 years ago.

just my wife

Expert:  Sam replied 4 years ago.

Thanks for your response

Then it would be best to keep them in just your wife's name, for the following reasons

1) Whilst there are tax savings to be made, by buying properties through a limited company on an annual basis, the accountancy costs far outweigh the tax savings, as you then have a Companies House tax return, Corporation tax return, Payroll to run, Self Assessment tax return and employment page (as director of the limited company) Expense and benefits returns, and this is costly. As opposed to just a self assessment tax return and rental income section.
2) When you own properties personally, you can take advantage of the annual exemption allowance when the property is sold (allows up to £10,600 exempt) limited companies do not get this exemption allowance
3) To then transfer the existing property into the limited company, would trigger a capital gain itself, due to change of ownership (although I imagine the value between purchase and transfer would not have exceeded more than £10,600, so there would be no capital gains tax to pay, but another accountancy cost to declare the gain existing by virtue of the transfer)

So my advise leave these in your wife's sole name.



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Customer: replied 4 years ago.

Is there at stage where the income reaches such a level the running it as a limited co woul dbe more tax efficent

Expert:  Sam replied 4 years ago.

Yes there is and that sits at around £350,000 + gross profits (taking all aspects into account)



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