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ExpertNina
ExpertNina,
Category: International Tax
Satisfied Customers: 74
Experience:  Expert
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I'm a UK citizen and would like to know how to efficiently

Customer Question

I'm a UK citizen and would like to know how to efficiently set up a limited (Ltd) property investment company to invest in properties to rent out. I will be using my own funds.
Submitted: 17 days ago.
Category: International Tax
Expert:  ExpertNina replied 17 days ago.
Hello! My name is***** have a degree in Accounting and Administration, I am specialized in tax/financial consulting and today I am going to help you with your query.

Dear client, your case is a bit complicated. I have to investigate several details before giving you an advice. As soon as I have a clear answer, I will be happy to answer your query. In the meantime if you have any other important information to tell me, it would be very helpful.

Thank you for trusting JustAnswer!

Customer: replied 17 days ago.
My current income is £100k+. This will to understand my UK tax tariff.
Expert:  ExpertNina replied 17 days ago.

Ok I understand dear customer, thank you very much for the additional information, it is very helpful. I am currently working on your inquiry and need to review some dellates. As soon as I have a suitable answer for you I will let you know. Thanks again!

Customer: replied 17 days ago.
Look forward to your answer
Expert:  ExpertNina replied 17 days ago.

Dear client, considering that you are going to make the investment yourself, it is advisable to incorporate a limited liability company as this way you can protect your personal assets.

To incorporate a limited liability company you need at least one shareholder and one director, who can be the same person. The difference between shareholder and director is very simple:

- The shareholder owns the company, but does not manage it. He receives dividends if the company makes a profit.

- The administrator has the power to manage the company, open bank accounts and conduct business operations.

To create this type of company you must first think of a name, be clear about the services you are going to offer and who will be the director of the company (which can be you without any problem).

To register this type of company you can do everything absolutely online, in fact there are many pages on the internet that offer this service and it is relatively fast and not so expensive. If you wish, I can help you to get one of these services.

As far as taxes are concerned, a limited liability company only pays 19% corporate tax on net profits and generally the directors are not obliged to pay social security.

To determine your profits, you must subtract the business expenses that you can deduct from your income.

As for VAT, the standard rate in the UK is 20%.

As you will be a shareholder, when your company makes a profit, you will be able to earn dividends. In the UK there is no withholding tax on dividends, so you should only pay 19% tax on your annual net profits.

Note that the limited company tax year is not a calendar year. The accounting year begins on the day of incorporation (or the day the business is started) and ends 365 days later. The first tax payment period is 21 months from incorporation.

Customer: replied 17 days ago.
Thanks, ***** ***** is the rate dependent on your overall personal tax band or do you pay only 19% on the dividends regardless?
Expert:  ExpertNina replied 17 days ago.

It is only 19% tax on your annual net profits as there is no tax on dividends in LTDs.

Customer: replied 17 days ago.
the company pays a corporation tax of 19% on profits and as a shareholder, I would not have to pay any additional tax for taking the profits out as dividends?
Customer: replied 17 days ago.
https://www.gov.uk/tax-on-dividends
Expert:  ExpertNina replied 17 days ago.

Exactly, dear customer. You only pay taxes on the company's profits, but no withholding tax is levied on dividend distributions to shareholders or partner companies.

Customer: replied 17 days ago.
But as a shareholder, I have to pay dividend tax afterwards?
Expert:  ExpertNina replied 17 days ago.

No dear customer, dividends in the UK have a 0% withholding tax. On each dividend payment, shareholders receive approximately 90% of the gross amount. This is because a 10% tax credit is automatically applied which can be recovered with the tax return. But as a shareholder you do not have to pay tax on dividends.

Expert:  ExpertNina replied 16 days ago.

Dear customer, did he answer your question? If not, please let me know and I'll be happy to answer your questions.

If you wish, you can add me as a favorite expert for future consultation. My name is @NinaC0418.

Thank you for trusting JustAnswer!