BTL and Ltd Company
Discussion
I am looking to purchase a few BTL properties with no mortgage and put it in my wife's name. I am in the 40% tax threshold and my wife is a stay-at-home mother with no income. The rental income will likely fall mainly into Income Tax bracket of 20% though some years it could go a tad into the 40% range.
From my very amateur analysis, I think I would be better off putting the properties in my wife's name (assume no future separation) which would be more tax efficient than setting up a limited company (which allows upto £300k income taxable at 20%), primarily if and when we come to sell, we would be charged 20% corporation tax in addition to the CGT tax of 18%/28%. Is that right?
From my very amateur analysis, I think I would be better off putting the properties in my wife's name (assume no future separation) which would be more tax efficient than setting up a limited company (which allows upto £300k income taxable at 20%), primarily if and when we come to sell, we would be charged 20% corporation tax in addition to the CGT tax of 18%/28%. Is that right?
You are more or less correct regarding how the company would be taxed on its income and gains.
However, the money that is going through the company will, at some point, need to be extracted to the directors and/or shareholders of the company. You need to factor in the income tax (and possibly NI) consequences of these withdrawals from the company.
A limited company is a not a cure-all set up and can create complications and unexpected tax consequences of its own.
However, the money that is going through the company will, at some point, need to be extracted to the directors and/or shareholders of the company. You need to factor in the income tax (and possibly NI) consequences of these withdrawals from the company.
A limited company is a not a cure-all set up and can create complications and unexpected tax consequences of its own.
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