Can a Limited Company Buy a Residential Property? Are you wondering if your Limited Company can buy a house? This article explores the legal and financial implications for you. It is important to understand the tax position for you and your company when a business buys a house for a Director. What are the basics of a Limited Company buying a house? As a property accountant with an expert team serving thousands of UK landlords that purchase buy-to-let properties, I know that the subject of whether a Limited Company can buy a house is a tricky one. Many of my clients ask if a company can buy a house for a Director. It is vital to understand the tax liabilities involved. If a business can buy a house, it may not be the best decision for you and your property company in the long term. Whether or not to buy a house through your Limited Company needs careful consideration. It can be done, but I advise you to research thoroughly whether it is a tax-efficient strategy. You could end up incurring a Benefit In Kind tax penalty unless you paid commercial rent to your company. Any gain on selling the property would be subject to corporation tax. Basic-rate taxpayers should avoid buying through a Limited Company while higher-rate taxpayers who are not looking to take salary or dividends from the company can reduce their tax liability from 40% personal tax to 20% corporation tax. The bigger picture is not can a business buy a house but whether it is financially prudent from a tax perspective for a company to buy a house for a Director. How to pay less tax as a Limited Company My property tax team are constantly looking at ways for clients to pay less tax. This includes if a property business structure is held within a Limited Company. It is possible to pay less tax as a Limited Company by utilising strategies designed to lower your corporation tax bill. These strategies include: Making an employer pension contribution Adding money to a pension can help to make sure you keep your financial independence when you decide to stop working. But if you have your own Limited Company, it could also help you to save on tax. If you’re employed by the Limited Company, you can make employer contributions to your pension from your company account. Employer contributions are normally treated as a business expense, so you won’t pay corporation tax on the contribution. If the pension contribution is made instead of paying yourself that amount of salary, then both you and your company will save on National Insurance as well. As an individual, you would not pay any income tax until you access money from your pension. You usually need to be at least 55 (rising to 57 from 2028) before you can access money in a pension. Make sure that you understand your pension contribution limits first. Most people in the UK have an annual allowance of £60,000 for the 2023-24 tax year but you might be able to carry forward any allowance you haven’t used from the previous three tax years. The annual allowance for the previous three tax years was £40,000. Pension and tax rules can change, and any benefits will depend on your circumstances. HMRC could question any corporation tax relief if your total salary and benefits package is more than the work they believe you have done for the company. This is why it is imperative to get the best possible advice from property tax experts if you are thinking of buying a house for a Director using a Limited Company. Claim for every business expense It is vital to claim everything you can when you run a Limited Company. By making a claim you reduce your profits which also reduces how much corporation tax you pay. You can claim for anything from office equipment and advertising costs to travel expenses and training courses. Ensure that the expenses you claim are only for business-related purposes. Keep a record of your expenses. Without a record, HMRC can refuse to accept your claim. Make a charity donation Limited companies can pay less corporation tax if they gift money to a charity or community amateur sports club. The value of any charity donations is deducted from any total business profits before tax is paid. Each individual case is different and depends on the long-term goals of the individual or Limited Company. What you should do next Having read this guide, it may be tempting to do nothing. But, you could end up paying more tax than you need as a Director and not getting the most tax-efficient use of your Limited Company. My team of property tax experts are on hand to help you save tax and pay HMRC the lowest amount of tax possible. It is vital to understand if a Limited Company can buy a house and whether a company can buy a house for a director to save on tax. I advise you to read this to get more details information and the best property tax advice on buying property through a Limited Company. I suggest that you book in time here today to ensure that you do not pay more tax on your property investments than you need to.
Can a Limited Company Buy a Residential Property? Are you wondering if your Limited Company can buy a house? This article explores the legal and financial implications for you. It is important to understand the tax position for you and your company when a business buys a house for a Director. What are the basics of a Limited Company buying a house? As a property accountant with an expert team serving thousands of UK landlords that purchase buy-to-let properties, I know that the subject of whether a Limited Company can buy a house is a tricky one. Many of my clients ask if a company can buy a house for a Director. It is vital to understand the tax liabilities involved. If a business can buy a house, it may not be the best decision for you and your property company in the long term. Whether or not to buy a house through your Limited Company needs careful consideration. It can be done, but I advise you to research thoroughly whether it is a tax-efficient strategy. You could end up incurring a Benefit In Kind tax penalty unless you paid commercial rent to your company. Any gain on selling the property would be subject to corporation tax. Basic-rate taxpayers should avoid buying through a Limited Company while higher-rate taxpayers who are not looking to take salary or dividends from the company can reduce their tax liability from 40% personal tax to 20% corporation tax. The bigger picture is not can a business buy a house but whether it is financially prudent from a tax perspective for a company to buy a house for a Director. How to pay less tax as a Limited Company My property tax team are constantly looking at ways for clients to pay less tax. This includes if a property business structure is held within a Limited Company. It is possible to pay less tax as a Limited Company by utilising strategies designed to lower your corporation tax bill. These strategies include: Making an employer pension contribution Adding money to a pension can help to make sure you keep your financial independence when you decide to stop working. But if you have your own Limited Company, it could also help you to save on tax. If you’re employed by the Limited Company, you can make employer contributions to your pension from your company account. Employer contributions are normally treated as a business expense, so you won’t pay corporation tax on the contribution. If the pension contribution is made instead of paying yourself that amount of salary, then both you and your company will save on National Insurance as well. As an individual, you would not pay any income tax until you access money from your pension. You usually need to be at least 55 (rising to 57 from 2028) before you can access money in a pension. Make sure that you understand your pension contribution limits first. Most people in the UK have an annual allowance of £60,000 for the 2023-24 tax year but you might be able to carry forward any allowance you haven’t used from the previous three tax years. The annual allowance for the previous three tax years was £40,000. Pension and tax rules can change, and any benefits will depend on your circumstances. HMRC could question any corporation tax relief if your total salary and benefits package is more than the work they believe you have done for the company. This is why it is imperative to get the best possible advice from property tax experts if you are thinking of buying a house for a Director using a Limited Company. Claim for every business expense It is vital to claim everything you can when you run a Limited Company. By making a claim you reduce your profits which also reduces how much corporation tax you pay. You can claim for anything from office equipment and advertising costs to travel expenses and training courses. Ensure that the expenses you claim are only for business-related purposes. Keep a record of your expenses. Without a record, HMRC can refuse to accept your claim. Make a charity donation Limited companies can pay less corporation tax if they gift money to a charity or community amateur sports club. The value of any charity donations is deducted from any total business profits before tax is paid. Each individual case is different and depends on the long-term goals of the individual or Limited Company. What you should do next Having read this guide, it may be tempting to do nothing. But, you could end up paying more tax than you need as a Director and not getting the most tax-efficient use of your Limited Company. My team of property tax experts are on hand to help you save tax and pay HMRC the lowest amount of tax possible. It is vital to understand if a Limited Company can buy a house and whether a company can buy a house for a director to save on tax. I advise you to read this to get more details information and the best property tax advice on buying property through a Limited Company. I suggest that you book in time here today to ensure that you do not pay more tax on your property investments than you need to.
