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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 16620
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I currently own four buy to let properties. Can I still

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I currently own four buy to let properties. Can I still claim tax on the mortgage interest I pay
JA: Have you talked to a tax professional about this?
Customer: If I had I would not be asking you!!
JA: Anything else you want the Accountant to know before I connect you?
Customer: I want to know how to set up a limited company to buy property

Hi. My name is Tony. I'm looking at your question now and will post my answer or ask for more information here in a short while.

Customer: replied 6 days ago.
Thank you
Customer: replied 6 days ago.
I should add the current properties no longer have mortgages on them
Customer: replied 6 days ago.
... which is why I am not sure of the tax situation. I have handled them on an amateur basis, but now want to dedicate my time to property as I am on the verge of retiring

The way that tax relief is given for let property mortgage interest has been changing since 6 April 2017 as you can see here. From 6 April 2020, tax relief will be given at a flat rate of 20%.

 

If you use a company to buy a property, the tax relief is not restricted. However, companies pay corporation tax at 19% (17% from 1 April 2020) which is less than the tax relief you get when you own properties personally. However, if you are a higher rate taxpayer, you will pay more tax on your rental profits than you would if the property was owned by a limited company. Transferring a property you own personally to a limited company will be treated as a disposal for CGT purposes so you may incur a CGT liability and not have the cash to pay it.

 

Setting up a company is simple. Read the information on the Companies House website here or use a property formation company to do the set up for you. The compliance responsibilities are more onerous but you could have an accountant prepare annual accounts for you and to deal with the tax office and Companies House.

 

I hope this helps but let me know if you have any further questions.

TonyTax and 2 other Tax Specialists are ready to help you
Customer: replied 6 days ago.
Thank you very helpful. I am going to see a tax property expert next week but wanted to do some calculations this weekend

Thanks and good luck.