UK Landlord Forum / Life

Im currently looking at increasing my portfolio from 2 properties to 5 or 6 properties within the next 5 years and have heard about a lot of people buying in a PLC as opposed to in their own name. Im aware of the basic tax benefits of this, but I was wondering if everyone has found this to be beneficial in real life or is it just a accountancy exercise.

Many thanks.

I think you mean a private limited company rather than a PLC. Whether it's worth it depends on whether the tax shield on your corporate debt exceeds the annual cost of faffing about with a company, plus any additional interest premium a lender may charge a company rather than an individual, plus the one-off tax costs - stamp duty and CGT (although that's really just a timing issue) - if you want to transfer your existing properties into the company.

I've just been through this exact thing.

I chose to set up a Ltd. company to buy a large house that was split into 4 flats and it works for me.

My reasons:
- My day job + existing 2 B2Ls were getting close to the 45% tax bracket, the income from the new investment would push it over
- The mortgage interest I am able to claim back is more than the saving of the more expensive Ltd BTL (note for me the ltd BTL was ~1% more than a personal BTL)
- I dont need to live on the rent income of the new flats, the profits can stay in the company forever to pay back the directors loan (the money i lent into the company for the deposit/initial operating costs) or buy more property. (i.e. i dont need to take it out and pay tax on it)
- Corporation Tax is currently only 19% rather than the 40% higher rate
- You can only have 3 personal BTL mortgages before it gets really tricky to get more

There are a bunch of things you need to sort out, but if you are good with paperwork then its not too onerous.  I'm happy to share if anyone has questions :-)