BTL – Wrap Services
Given the tax changes coming from April 2017, Black Book now offers a number of highly efficient services designed specifically for both new and existing Landlords (with portfolios).
The Buy to Let Tax Relief changes (from April 2017) will directly impact all Individual Landlords – both existing and new – and many are now considering the use of a specially-formed (SPV) Limited Company to help mitigate the impact of the changes.
To help mitigate these changes there are several advantages to be gained in setting up a Limited Company, but there are also disadvantages too, so it won’t be right for everyone. It is therefore crucial that Landlords are fully informed, and professionally advised, before making any decisions.
Many Landlords (and Intermediaries) are unsure who and where to go to get the necessary guidance about this. Black Book has therefore launched a unique, menu-based BTL Wrap Service – all the required Steps for consideration by Landlords, each of which can be selected independently, depending on individual requirements.
Landlords with Existing Portfolios?
Landlords already managing property portfolios as a “business” may well be able to incorporate without giving rise to any Capital Gains Tax (CGT). In addition, where the business has been operating as a Partnership, they may also be able to incorporate without giving rise to any Stamp Duty Land Tax (SDLT) either.
Black Book has partnered with a specialist Consultancy firm who assists in these areas. The advice they provide is formal advice; given under the auspices of the SRA and Bar Council, and is only chargeable following the successful completion of statutory transfers into the Limited Company.
So, whether it is a for new BTL purchase, or for existing portfolio Landlords, time is now of the essence in planning for these incoming tax changes, so to take advantage of any of the above services, or just to learn more about them, either:
Call 0800 651 6511 (quoting: “BTL Wrap Services”)
Keen to know more?
Advantages of a ‘Limited Company BTL’
Higher Tax Relief – The incoming tax relief changes will not affect Limited Companies. Therefore, if you are a top rate tax payer, the tax payable via a Limited Company will be lower than the tax you would pay on your individual income.
No tax on dividends up to £5,000 for individuals – from April 2016, the ‘Dividend Tax Credit’ will be replaced by a new tax-free ‘Dividend Allowance’ of £5,000. This means you can potentially receive tax free dividend income from your investment properties via a Limited Company. If you have multiple shareholders, then potentially you could each extract up to £5,000 per year from the Limited Company, tax free.
No Income Tax when re-investing profits to secure further properties. You could grow your BTL portfolio more quickly within a Limited Company as there will be no income tax on retained profit, thus allowing more available cash to re-invest. Although Corporation Tax is payable on trading profits (20%; 2015/16; reducing to 18% by 2020), this is still far lower than the higher income tax rate (40% for £31,786 to £150,000; 2015/16).
Personal funds can be drawn back out of the company. Any advances you make to your Limited Company (e.g. the mortgage deposit), can be drawn back out of the company by way of a Directors Loan.
Disadvantages of a ‘Limited Company BTL’
No Capital Gains Tax (CGT) Allowance when the company sells a property – whereas individuals selling a property benefit from £11,100 CGT allowance (2015/16)
Additional costs of running a Limited Company – such costs include the preparation of accounts, company tax and corporation tax calculations for HMRC, filing at Companies House, legal fees, and annual auditing if applicable. Accountant’s may also charge higher fees when preparing accounts for Limited Companies.
Higher Mortgage Rates – In most cases, Lenders charge higher interest rates and fees for Limited Companies, as opposed to Individual Buy to Let mortgages.
Reduced Choice (of lenders and mortgages) – Most lenders do not offer mortgages to Limited Companies, and when they do, the range of products tends to be much smaller. Limited Company BTL products typically range from 65% LTV up to 80% LTV.
Why Black Book Finance?
Black Book has access to a broad range of BTL products for both Individuals and for those buying through a Limited Company. With our breadth of experience, we can source attractive rates and flexible criteria, to be able to offer competitive solutions every time.
Experienced and first-time Landlords accepted.
A Limited Company can be new, existing, or a subsidiary.
The SPV (Special Purpose Vehicle) is not lender specific, so there is no restriction to the use of different lenders for other properties within the same Limited Company.
Rental calculation, allows you to borrow more/deposit less, with rental calculations at just 125% of the initial payment.
Up to 80% LTV available.
5 year fixed rates available from 3.49% (for Limited Companies) – 125% rental calculation, based on pay rate.
Wide range of product options, with many specifically designed for Limited Company BTLs.