Sunday, February 25, 2024

Buy to let investors in the UK cautioned over incorporating property business

Buy to let investors in the UK have been cautioned over incorporating their property business into a limited company

Buy to let investors in the UK have been asked to proceed with caution before incorporating their property business into a limited company. Landlords are being urged to tread with caution and seek appropriate advice before rushing to incorporate their property business into a limited company as a number of BTL investors are incorporating their property.

The warning, from specialist buy to let broker, Commercial Trust Limited, comes after recent press reports suggesting that incorporation has become a popular move among buy to let landlords.

The reduction in mortgage interest tax relief and the introduction of stamp duty are two relatively recent initiatives that has led some landlords to reassess their property businesses and deciding to incorporate.

With lenders predicting there will continue to be a growing trend towards limited company buy to let activity this year, Andrew Turner, chief executive at Commercial Trust Limited, sounded a cautionary note.

He said that whilst it is understandable that buy to let landlords want to avoid paying more tax than is necessary, it is essential, as with any investment, that they fully investigate how their personal circumstances apply to buy to let taxation.

Upon face value, many landlords are perhaps seeing the headlines and are considering incorporating their property investments, as limited companies are taxed differently to individuals. However, taxation is a complex issue and he urged anyone considering this move, to seek advice from a tax specialist first, to ensure that their buy to let venture would actually be better off tax-wise, in a limited company.

He said that having done so, they would be delighted to help any landlords that then want to consider investing in buy to let as a limited company. There are a wide range of lenders and products that are available and based on individual circumstances.

But the message should be clear to landlords thinking of taking the limited company option, to investigate fully first.

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