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bigduckontax, Accountant
Category: Tax
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We have a Buy To Let mortgage in our personal names. The

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We have a Buy To Let mortgage in our personal names . The deposit for it came from our limited company. It has been suggested to us that we could notify HMRC by letter that the company owns an asset in the directors names and essentially have the rents etc go into the limited company . Is this practise legal and above board ? This way we would save paying tax on the dividends we took out for deposit.
Please advise as we don't want to do anything wrong. To me it seems easier and hassle free to keep the Buy ToLet mortgage in personal ownership . However it has been suggested to us that notifying the Inland revenue that the directors hold a company asset may be very tax efficient as long as all the rents etc go to the Ltd Co. Please advise
Submitted: 3 months ago.
Category: Tax
Expert:  bigduckontax replied 3 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. I am working on your question and will respond shortly.

Customer: replied 3 months ago.
Hi Keith , are you able to advise on the above question ?
Expert:  bigduckontax replied 3 months ago.

Yes, I am working upon it. Firstly the Inland Revenue ceased to exist about five years ago on amalgamation with HM Customs and Excise to form HMRC.

Customer: replied 3 months ago.
HMRC of course.
Expert:  bigduckontax replied 3 months ago.

You could be in trouble here. If the property is in the name of the company then there is no problem, rents come into the company and any surplus made by the company subject to Corporation Tax at 20%. Dividends up to 5K pa may be paid to shareholders tax free.

The danger is that if the buy to let is in your names than the deposit could be deemed a loan by the company to directors which must be repaid within nine months of your company's CT accounting period and suffer the taxation penalties set out here:

https://www.gov.uk/directors-loans/you-owe-your-company-money

However, you suggest that the deposit was raised from dividends, assuming that the company had spare cash for this purpose, then no such loan has taken place. Remeber dividends do not count against the company in the CT computation.

I do hope that I have been able to shed some light on the situation.

Customer: replied 3 months ago.
Thank you
Expert:  bigduckontax replied 3 months ago.

Delighted to have been of assistance.

Please be so kind as to rate me before you leave the Just Answer site.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3103
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 3 months ago.

Thank you for your support.

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