- Last Updated: 04 May 2022
This is a freeview 'At a glance' guide illustrating some key differences between holding rental property personally or via a company.
Should I hold a buy-to-let or rental property personally or in a company?
Subscribers see: Buy-to-let ownership: personal v company? for a more conclusive version of this guide which includes worked case studies for profit extraction, Capital Gains Tax reliefs, tax planning, share planning, trusts, Inheritance Tax (IHT) issues for non-doms and much much more.
At a glance
At a glance: some of the differences between ownership as an individual or via a company for tax:
Held personally |
Held through company |
Profits
|
Profits
|
Occupation by company owner Expenses
|
Occupation by company owner PAYE
|
Tax on disposal of the property: UK resident
|
Tax on disposal of the property: UK resident
|
Tax on disposal of the property: non-UK resident
|
Tax on disposal of the property: non-UK resident
ATED
|
Extraction of funds Income
Capital
Incorporation
|
Extraction of funds from the company Profit extraction Income Tax
Dividends
See Dividend tax Capital Gains Tax
|
Ownership
|
Ownership
|
Losses
|
Losses
|
Annual Tax on Enveloped Dwellings (ATED)
|
Annual Tax on Enveloped Dwellings (ATED)
|
Stamp Duty Land Tax (SDLT)
Land and Building Transaction Tax (LBTT)
From 1 April 2018 Welsh Land Transaction Tax (LTT) replaces Stamp Duty Land Tax (SDLT) in Wales, see Welsh Land Transaction Tax. |
Stamp Duty Land Tax (SDLT)
From 1 April 2015 properties in Scotland are subject to LBTT instead of SDLT. See LBTT: Additional Dwelling Supplement From 1 April 2018 Welsh Land Transaction Tax (LTT) replaces Stamp Duty Land Tax (SDLT) in Wales, see Welsh Land Transaction Tax. Stamp Duty
|
Inheritance Tax (IHT)
IHT and non-UK domiciled individuals
|
Inheritance Tax (IHT)
Non-UK domiciled owners
|
De-enveloping N/A |
De-enveloping
|
VAT
|
VAT
|
Converting business into a trade
|
Converting business into a trade
|
Buy-to-let: use as an investment company/pension/alternative to trust
A property investment company can be a tax-efficient vehicle see: Buy-to-let ownership: personal v company? (subscribers) the detailed version of this guide, see also:
- IHT: investment company shares
- Family Investment companies
- For further general advantages of using a company see Sole Trader v Limited Company
New property business
See Property Profits and Losses and Joint Property for further details.
Property Letting: CGT and IHT issues
See:
- Property Letting: CGT and IHT issue (unincorporated business) or
- IHT & CGT: investment company shares.
Case study
Case study for 2015-16, 2016-17, 2017-18, 2018-19, 2019-20 and 2020-21.
Step-by-step comparison of tax between personal ownership and a company tracking tax reliefs and liabilities on incorporation and then considering different methods of profit extraction and following by sale or transfer for IHT.
See Buy-to-let ownership: personal v company? for the detailed version of this guide
Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.
Register with us now to receive our unique FREE Tax Planning Tips and Advice Guide & our FREE OMB Newsletter.
Enjoying the Practical Tax content on www.rossmartin.co.uk?
Sign up now to receive a unique FREE Tax Planning Tips and Advice Guide & our FREE Newsletter.