BTL limited company set up
Discussion
hi all just want to validate my plan whether what I have come up with makes sense
I'm planning to set up new ltd company to invest in BTL properties (residential/commercial etc). This is long term for me, so I'm not looking to sell properties in near future nor I am looking to draw income from the company as I have my other ltd company which I use for contracting and that where I draw my salary/dividends from.
Plan is to set up company with myself and my wife being shareholders - £1 each starting capital (me being director, she would just hold shares) and then I would pay in, lets say £50k director loan so that company has funds to purchase property, pay stamp duty and all that.
Am I right in thinking that that £50k loan will continue to appear as liabilities and company will have to pay it back so whilst I do not look to draw salary/dividend, eventually when company has some spare profit, I could just pay it back in tranches to myself? I.e. £5k a year in couple of years time
My main worries are if
- I can pay it back in 5-20 years (initially company would have little profit with mortgage repayments covering most of rental income)
- when I do pay myself back the loan from the ltd company this does not account as my income for current tax year (since I have already paid tax on that money (its simply my existing savings). Would it still need to be declared on self assessment even if it doesn't account as income?
Just want to check in 10 -15 years it wouldn't be a problem for me to repay this money.
The reason I want to go limited is that we've got already 2 btl properties owned privately and I'm getting fed up with having to declare it on my self assessment (thus reducing income from my main business) when I don't actually see this money as the rent covers the mortgage repayments.
thanks for the advice.
I'm planning to set up new ltd company to invest in BTL properties (residential/commercial etc). This is long term for me, so I'm not looking to sell properties in near future nor I am looking to draw income from the company as I have my other ltd company which I use for contracting and that where I draw my salary/dividends from.
Plan is to set up company with myself and my wife being shareholders - £1 each starting capital (me being director, she would just hold shares) and then I would pay in, lets say £50k director loan so that company has funds to purchase property, pay stamp duty and all that.
Am I right in thinking that that £50k loan will continue to appear as liabilities and company will have to pay it back so whilst I do not look to draw salary/dividend, eventually when company has some spare profit, I could just pay it back in tranches to myself? I.e. £5k a year in couple of years time
My main worries are if
- I can pay it back in 5-20 years (initially company would have little profit with mortgage repayments covering most of rental income)
- when I do pay myself back the loan from the ltd company this does not account as my income for current tax year (since I have already paid tax on that money (its simply my existing savings). Would it still need to be declared on self assessment even if it doesn't account as income?
Just want to check in 10 -15 years it wouldn't be a problem for me to repay this money.
The reason I want to go limited is that we've got already 2 btl properties owned privately and I'm getting fed up with having to declare it on my self assessment (thus reducing income from my main business) when I don't actually see this money as the rent covers the mortgage repayments.
thanks for the advice.
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