(1) Reviewed by our chartered accountants. Please ask for the full workings and assumptions. Some key assumptions are an investor is non-UK resident and taxed at Higher Rates in England, purchases a property for £500k producing a gross rent of £20k p.a.. Investor uses a 70% LTV interest only mortgage at 3% interest. The property’s value increases 3% p.a. and is sold after 5 years. All tax rates are based on 19/20 tax year. As with any illustration, this is a simplified position and does not take into account individual circumstances which could affect the tax outcomes. Tax legislation is complex and legislation is subject to changes in drafting as well as changes in interpretation by courts and tax authorities. The illustrations are not designed to be an exhaustive example of all the tax implications that may affect you and you should seek professional advice in considering the tax position appropriate to your circumstances.
Advantages in details
Open the door to tax efficiencies
Same taxes on property purchase
Same taxes (e.g., SDLT) as personal ownership if you rent out your property to 3rd parties
Deduct mortgage interest from your tax bill
Replaced with a basic rate credit
This is a significant saving on its own
Efficiently take income from your property
Income Tax as profits arise
Choose between repaying an owner loan or dividends
If you sell, Stamp Duty Land Tax (SDLT) for the buyer
Buyer still pays SDLT
No SDLT when buying shares = price advantage
Lower Capital Gains Tax (CGT)
18% or 28% CGT tax
10% or 20% CGT tax for sale of shares
Protect yourself through limited personal liability
- All companies set up by GetGround are private limited companies incorporated in England and Wales
- Given they are private limited the company’s assets and liabilities are separate to the shareholders'. So, if their investment goes wrong, the shareholders' other assets are safer (e.g., their family home)
Easily buy and sell with others
- GetGround allows up to 8 shareholders in any company
- Buy and sell shares without:
- Stamp Duty Land Tax
- Conveyancing lawyers
- Complete a share transfer in a day rather than the 6-8 weeks it usually takes for property conveyancing
Improve your inheritance planning
- Shares are subject to inheritance tax just as property is
- However, with shares you are able to more flexibly manage your inheritance tax
- For example, there is a mechanic where you can gift value to another person, and over time the inheritance tax liability on this reduces until after 7 years it is 0%. With shares you can:
- Slowly gift value away e.g., 10% of your company every year
- Separate economics from control, so you can gift away the economics but retain control e.g., parents often like this solution
Access well-developed mortgage markets
- Onshore UK entities with access to specialist buy-to-let lenders
- Lenders tend to have lower income requirements for company versus personal ownership
- Lenders tend to have lower rental stress tests for company versus personal ownership
- Commercial lending options
Send foreign currency to your financial account and exchange it to GBP
Competitor fee comparison
GetGround is 10x more cost-effective than alternatives.
Company secretarial service
Business bank account
Best practices on how to best form your buy-to-let company. Get your copy now! Topics include:
- What common mistakes do investors make when structuring their companies?
- What is a SIC code?
- What's an article of association, and do I need to use an owner loan document?
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