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Landlord Insider
On the Landlord Insider blog, you’ll find some excellent resources for landlords of all sizes. From the latest landlord news, to professional advice, tips and guides for landlords, there’s something for everyone. Brought to you by the excellent team behind the Landlord Vision property management software.

Landlords Considering Incorporating in Coming Months

pen and stampResearch carried out by the National Landlords Association (NLA) has revealed that 40% of landlords are considering incorporating their buy to let businesses in the coming months, in order to minimise exposure to recent government tax changes.

 

 

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Despite the interest in incorporation, however, only 1% of landlords have actually made the move, which is probably explained by the fact that it is expensive to transfer personal property into a limited company.

Changes to Landlord Tax
Changes to mortgage interest relief will start to be phased in from April 2017, at which point landlords will no longer be able to off-set mortgage interest against taxable profits. The NLA has labelled the changes as ‘Turnover Tax’, because tax will be calculated on rental income rather than profits.

Higher Tax Bills for Landlords
As a result of the changes, many landlords will be pushed into the higher tax brackets, which could leave them with bigger tax bills. Landlords who decide to restructure as a limited company will be exempt from these changes because limited companies pay corporation tax instead, which is currently only 20%.

“Transferring personally held property to a limited company isn’t a straightforward process, so it’s not surprising that so few have taken this action so far,” says Richard Lambert from the NLA.

“Landlords need to do their research but many will realise that incorporating simply doesn’t stack up financially; doing so will incur capital gains and potential stamp duty charges, which means the process may be prohibitively expensive.”