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​More warnings over the limitations of going limited

Thursday 28 June 2018

Another organisation has come out to warn landlords they should really think twice before taking the leap into incorporation – and seek specialist tax advice. 

Buy-to-let mortgage broker Commercial Trust Limited cites recent data from Mortgages for Business, which  shows that 77 per cent of all buy-to-let purchase applications were made via a corporate vehicle in the first quarter of 2018. 

It’s a story Simple landlords insurance reported earlier this month, and follows the  raft of changes landlords have faced over the last few years, including higher stamp duty, tougher mortgage lending conditions and the phasing out of mortgage tax relief. 

As a result, many buy-to-let investors have changed how they invest, turning to incorporation as a means of maintaining investment levels in the private rented sector. 

Andrew Turner, chief executive at Commercial Trust Limited, 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.”

Our very own tax specialist and guest blogger, Tony Gimple of Less Tax for Landlords agrees. In his latest blog he explains how incorporation is not the Holy Grail… “Landlords are looking for solutions; they are being told that [incorporation] is the quick fix. Without really doing your research you could end up coming a cropper.”

For more information on incorporation – read Tony’s blog here. 

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