New BTL tax rules; ways around?

[LDN]

Looking at the new tax rules... I'm inclined to look at ways around this - the 'assault on BTL' as its been called, will really sting.

I'm just thinking out loud and tell me if I'm way wide of the mark here but...

One way around is surely to set up a Limited company - that's acts as an agent collecting all of the rental income - and then, as a director; I can draw as little or as much as a I want from that?

The Limited company wouldn't own the properties - merely be a lettings agent of sorts - collecting all the rental income that used to come to me, directly.

Is there any issue with this scenario? (I'm imagining their will be).

I read of landlords transferring their property portfolio into a Limited company - but why must the Limited co. own the property, if it's to collect rent from it?

[KevinCamaroSS]

The limited company would in effect be the letting agent? This would then need to pass on the rent, less the fees, to the actual owner. Otherwise I am sure HMRC would see through the ploy.

[LDN]

Yes, Some money could be passed on - but nowhere near as much as if the rent were being paid directly.

HMRC would treat this as a ploy? I suppose they might but - the amount of tricks I'm sure many BTL landlords are looking at; I can't see where they'll draw a line. Transferring the ownership of the properties, to a Limited co. could also be deemed a ploy - but it's what many are doing...

Perhaps I'm clutching at straws.

[The Moose]

As I understand it, existing property is being transferred to a limited company to allow the offsetting of interest payments against rental income. This can be done without incurring additional stamp duty, I believe.

In what you propose I don't know what the implications would be of having a limited company running the leggings. I guess there nothing to stop you agreeing an extortionate rate with a leggings agent company if you so desired.

[KevinCamaroSS]

You can transfer property to a company, however, you will almost certainly be subject to personal CGT and possibly stamp duty for the company.

An alternative:

Use a lease or management company

Under the correct structure, your personally-held properties can be leased to a company, so that most of the profits accumulate within the company. Tenancies are between the tenant and the company, and your company provides a ‘guaranteed rent’ to you personally. This arrangement is an advanced tax-planning method and requires careful set-up, flawless banking arrangements, and rent / repairs / contracts set at commercial rates. Similarly, a management company can be used to enable some of the profits to be transferred to a company.

[bearman68]

As I understand it, while finance costs are now not 'allowed', the total tax bill depends on your overall income - so if you are a 20%tax payer, the net change in tax is in effect very small,and may even be a reduction. Surely it depends on your individual circumstances to decide if a Ltd company is the way forward? And for a small number of properties, that doesn't seem likely.
However, with 4 BTL, I will be interested in the argument around this..