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BTL via a LTD

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Hi,

I have a client who is employed and has a small rental portfolio, he earns £34,000, and his wife earns £6000 and receives carers allowance as she carers for a disabled child. They want to add a property to their portfolio. They want to purchase via an LTD company and are asking if they can loan the company the deposit and therefore be paid back the money after paying the corporation tax due and would this be classed as income? They don’t want to increase their income as this would reduce the tax credits they received. So the question is does purchasing via a LTD company help them?

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By The Dullard
02nd Sep 2019 17:07

Have your clients considered engaging an accountant?

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RLI
By lionofludesch
02nd Sep 2019 17:09

Repaying the loan doesn't count as income.

However, the fact that you're asking the question suggests that you might be better passing this client on to a colleague who feels more confident with cases of this kind.

Not to mention that there are a lot of questions you're not asking. As JoF says, where's the rest of the purchase price coming from ? How's the tax position going to pan out ?

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Replying to lionofludesch:
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By Tax Dragon
03rd Sep 2019 08:46

lionofludesch wrote:

Repaying the loan doesn't count as income.

FYI there are circumstances when a repayment can be matched with income (and therefore taxed as such). See e.g. s633 ITTOIA 2005 (and note s634(1)(a) and s620(1)).

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Replying to Tax Dragon:
RLI
By lionofludesch
03rd Sep 2019 09:53

You think this is a settlement ?

Well, it could be. There's no information to prove it one way or the other.

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By Accountant A
02nd Sep 2019 17:56

JackSmith1977uk wrote:

I have a client ....

I bet you don't!

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By lionofludesch
02nd Sep 2019 18:03

I sincerely hope not, anyway.

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By Wanderer
02nd Sep 2019 17:59

JackSmith1977uk Member Since: 2nd Sep 2019

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By Accountant A
02nd Sep 2019 18:08

I have a client who is trying to screw the benefits system ....

JackSmith1977uk wrote:

Hi

 

I have a client who is employed and has a small rental portfolio, he earns £34,000, and his wife earns £6000 and receives carers allowance as she carers for a disabled child. They want to add a property to their portfolio. They want to purchase via an LTD company and are asking if they can loan the company the deposit and therefore be paid back the money after paying the corporation tax due and would this be classed as income? They don’t want to increase their income as this would reduce the tax credits they received. So the question is does purchasing via a LTD company help them?

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By Matrix
02nd Sep 2019 18:39

I haven’t looked at this for a while but when I looked at income retained in a limited company for tax credits then the shareholders were deemed to receive the income even if it was not paid out. They need to be careful declaring their income since if they are diverting their income to obtain benefits then this could be benefits fraud.

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