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Landlords urged to be cautious over limited company incorporation

Landlords are being advised by buy-to let broker Commercial Trust Limited to seek specialist tax advice before making the decision to incorporate their property business into a limited company.

There has been a significant increase in the number of landlords using limited companies to manage their buy-to-let portfolios as a result of greater government regulation, according to recent data from Mortgages for Business.

The figures revealed that 77% of all buy-to-let purchase applications were made via a corporate vehicle in the first quarter of 2018, as landlords try to deal with a raft of changes in the private rented sector, including higher stamp duty, tougher mortgage lending conditions and the phasing out of mortgage tax relief.


Many buy-to-let investors feel as though they have been left with little alternative but to turn to incorporation as a way of maintaining investment levels in the PRS, however Andrew Turner, chief executive at Commercial Trust Limited, has warned landlords to be careful.

He said: “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 I would urge 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.

“Having done so, we 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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