How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask bigduckontax Your Own Question

bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3119
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

there - I am looking to buy a buy to let property. I

Customer Question

there -
I am looking to buy a buy to let property.
I have money in my ltd company i would like to use to finance the purchase.
I do not want to draw this money as salary or dividend as i would be subject to higher rate income tax.
Instead - i would like the company to loan me the money, and i will pay back at a commercial rate of interest. (or interest free if possible)
Can this be done - and if so how do i need to set it up so i am doing everything by the book?
Do i need to specify a term loan, can it be as long as i want? Can it be interest only? could i borrow 100k over 25 years and pay back only the interest each year? Or do i need to make capital repayments also?
Cheers!
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
, I'm Keith and happy to help you with your question.
You are presumably a director of your company. If so then the moneys advanced would be a loan to a director. Such loans create horrendous taxation problems unless cleared within nine months of the end of the company's accounting year. They are, in my opinion, best avoided.
Your solution is company to buy the property, collect the rentals and pay the bills etc. You could then extract the money from the company by way of salary distributed under PAYE arrangements, compulsory as you are a director. If this pushes your personal income into higher tax brackets this could be reduced by investment in a Private Pension Scheme within permitted limits [currently 40K per annum]. Alternatively the company could fund the scheme direct and these payments would be allowed against Corporation Tax as, indeed, would salary.
I do hope I have been able to show you a possible and tax efficient solution to your conundrum.
Customer: replied 1 year ago.

Ok understood -

Ideally i would like to ring fence my current trading company from my property.

Is it possible to set up a new company, and pass the income to the property company either by a loan or by subscribing to shares?

If so - can it be interest free or does it need to be at commercial rate of interest?

Expert:  bigduckontax replied 1 year ago.
Certainly this route is feasible. What each company agrees to by way of interest rates inter company loans is a matter companies themselves through their Boards of Directors who will set policy.
Fortunately you are not talking about US companies. Such capers are frowned upon over the pond.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3119
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you support.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.