Reduce tax on rental property
Its my first post but let me say this website is amazing and I've been reading the forum daily. I've only been in practice a year now so still finding my feet.
Anyway a client came in today and asked if the following scenario was possible in order to reduce his income tax bill. He currently has 8 properties out on rent for which the mortgage interest rates are very low so his rental income is quite high.
He is thinking of forming a ltd company and then renting the properties to the ltd company for a small sum (just enough to cover his mortgage and a bit of expendature) then using the ltd company to rent the property out again to the tenants through a letting agents.
Although I can see the saving would be significant as he is a high rate tax payer currently, would this foul of any legislation?
I dont want to give him any wrong advice so I said I'll look into it for him before he goes ahead with it. Any ideas? Thanks in advance