Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Ros ." at "22/09/2015 - 09:40":

That is my great fear Ros....but I can't just lie back and wait to see what the Chancellor may or may not do. The ironic thing is....I was not particularly looking for a second property....I own a small service Ltd company consultancy.....The budget changes to how directors are taxed when extracting dividends from a business now make it unattractive to extract money from the business.. increasingly I think you will see small personal service companies such as mine look towards property as a potential use of excess funds.

Reply to the comment left by "Costas Tzanos" at "22/09/2015 - 09:58":

If you do that Costas please take professional advice. All to often I come across people in your situation who create a Special Service Vehicle "SPC" company as a subsidiary to hold the property. If the contracting company then collapsed (e.g. due to being sued) then the property assets are affected too. A simple solution is to create a holding company to purchase the BTL properties and for the Consulting business to be a subsidiary of that.
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Reply to the comment left by "Mark Alexander" at "22/09/2015 - 10:07":

That's a very good point that you make Mark. I had thought about the being sued route as I have professional indemnity insurance in place for that...However. ...insurance is only as good as the insurer you insure with. I shall mention the holding company option with my accountant today
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Reply to the comment left by "Costas Tzanos" at "22/09/2015 - 10:14":

Hi Costas

Maybe you shouldn't mention this to your accountant but ask him for advice on how you should structure this. Look upon it as a bit of a test for him.

If he suggests the subsidiary route and then you raise the holding company alternative and he agrees then you might also question what else he hasn't considered and whether he's sufficiently specialised to be advising you going forwards.

I recommend you also talk to this chap >>> http://www.property118.com/member/?id=452
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Reply to the comment left by "Ros ." at "22/09/2015 - 09:24":

In 2014-15, corporation tax made up 7% of the total tax take in the UK. We need to be clear that cutting corporation tax amounts to a transfer to the largest businesses that disproportionately benefits them. We are concerned that a more effective policy measure, such as the one suggested at the election, could have been used to help all businesses, rather than just the largest companies. We question the reasoning behind the Government’s policy decision. It appears that corporation tax has been used because it is relatively easy to alter. I am sure the Government recognise that a substantial amount of money is going to businesses. Will the Minister outline how the Government intend to pay for the rate cut, which in 2020-21 will cost £2.5 billion? We have not seen a breakdown of exactly how that will be paid.

This I believe is for all businesses not just btl

Reply to the comment left by "Ros ." at "22/09/2015 - 09:40":

Hi ros. Even if ltd companies could not offset mortgage interest on residential Property (I think that it would be 100x more difficult to do it for corporates) they still have the advantage of 18% tax vs 40-45% tax.

You can take £5k out tax free and then will be subject to divi tax but even after the divi tax you are better off.

My general view is that if the UK had some large presidential REIT/companies on the stock exchange it would be quite a positive thing. Personally if UK listed residential companies existed I think I would stop ingesting into Property and just buy shares inside an ISA/Pension.

I've just received a email from my accountants with a round up of the Summer Budget.

Nothing at all is mentioned about the Restriction of Interest Relief, even though I have spoken to them about it.

I suspect I will be changing accountants.

Reply to the comment left by "Lisa Stux" at "22/09/2015 - 14:52":

Hi Lisa.
I know that Appalled Landlord wrote a response to this kind of thing during the last week I think. If you go onto his Member profile and go down through some of the comments you might find a letter which you can more-or-less use to tell them off.
All the best.

Reply to the comment left by "Roger Rabbit" at "22/09/2015 - 11:13":

What makes you think they won't wait for a year or so and then decide that all limited companies which hold residential properties (they could phrase it to catch all the landlords they want to catch) will now be taxed at 40% or 50% or whatever they choose? They can say they are 'leveling the playing field with 'individual' landlords, as they have been enjoying 'an unfair advantage.'

Reply to the comment left by "Ros ." at "22/09/2015 - 14:58":

I certainly will. They obviously don t understand the impact it will have....but isn't that exactly what I'm supposed to be paying them for?