Aswell as serving landlords, we also specialise in a full range of services.
Property investors holding property personally have been hit with numerous tax charges in recent years. Transferring properties to a limited company can mitigate a lot of these tax charges. The transfer can be achieved in a tax-efficient manner with our planning.
Over the last 3 years property investors have been subject to tax increases due to:
- Abolition of wear & tear allowance
- 3% Stamp Duty Land Tax surcharge
- Mortgage interest relief restrictions (known as “Section 24”)
As companies are not affected by Section 24, it is beneficial for landlords to incorporate their portfolios into a limited company.
Many accountants (not tax specialists) advise their property investor clients against incorporation on the basis the transfer would be subject to:
- Capital Gains Tax
- Stamp Duty Land Tax
Benefits of incorporation
- Corporation tax of 19% vs income tax of 40%
- Full deduction for mortgage interest
- Capital gains up to date of incorporation are effectively exempted
- Gains on future disposal based on capital growth from date of incorporation to disposal
- Control on profit extraction
- Greater scope for Inheritance Tax Planning
Are you a business-owner with children in private school?
Did you know business owners with children in private education can pay for school fees in a tax efficient manner. At CTP, our Chartered Tax Advisors have years of experience setting up these structures and can advise on all of the affected taxes.
- Some shares in company are transferred into a trust.
- Dividend is paid to the trust.
- Trust then pays for school fees.
- Dividend is not taxed as it’s ultimately assessed on child – who has £13,500 of tax-free allowances per year (usually enough to cover school fees).
- The average cost of private school is £15,000 per annum.
Business owner draws dividend from company, suffers 32.5% tax on dividend, then pays school fees.
Companies that use technology to improve a product/process can claim for tax relief on qualifying project. Tax savings can be significant.
What is it?
The most generous corporation tax relief there is. Enhanced tax relief for qualifying R&D projects.
Tax savings of:
- 24.7% (Profit-making companies)
- 33.35% (Loss-making companies)
of eligible expenditure
LOSS MAKING COMPANIES CAN GET A CASH REPAYMENT FROM HMRC!!!!
Which companies qualify?
All sorts of companies qualify. As the definition of R&D is so broad we’ve had companies from all industries make claims, including:
- Curtain pole makers
- Pension fund managers
- & everything in between
Qualifying R&D project
The definition of R&D, for these purposes, is very broad.
If a company has used technology to:
- Improve a product
- Improve a process
- Increase efficiency
- Create a bespoke soluion
then there will be a qualifying project
Where asset is “pregnant” with capital gain, gain could be mitigated by transferring to a structure ahead of disposal.
Do you have key employees? If they left the business would it have a detrimental affect? Would incentivising them through shares/share options increase your chances of retaining them? Speak to us about employee share schemes to retain your key employees.
If you would like to discuss your tax with us, you can contact us using phone or email and a member of our team will be able to assist you. You can also make an online enquiry through our Contact Form.