Set Up A Limited Company For Buy To Let Property Investments

Free set up of a Family Investment Company (FIC) / SMART UK limited company structure

We provide a unique service to you as a buy-to-let landlord. We are set up a UK Family Investment Company (FIC) / SMART structure with freezer shares and growth shares for free if landlords agree to come on board with Optimise Accountants as a retained client.

The FIC / SMART company can be set up with one of our tax advisors. This fee includes a 60-minute tax consultation to discuss your:

– Current tax structure

– Future Investment Plans

– Who in your family is to benefit from the property investments and company structure

We will also cover vital information such as:

– The pros of setting one up

– The cons of using one

– What are ordinary shares, and what is meant by freezer and growth shares

– How to extract money

– How to minimise Inheritance Tax by passing the limited company wealth on you your children.

We will show you how to set up a company in the right way.

Using a limited company will require you to pay tax to HMRC. Please use our free online corporation tax calculator.

What are the basics of setting one up?

This article is perfect for anyone setting up a buy-to-let property investment limited company for rental income.

As property accountants & Property Tax consultants serving thousands of UK landlords that purchase buy-to-let properties, we know that choosing the right property tax structure is essential for our clients. A property investment Co should be set up with care.

Private sector businesses account for 35% of the UK’s companies, with over one million set up in London alone.

More than four million Limited Companies are registered in the UK, with over 500,000 new companies set up annually.

Private Limited Companies can also be called PLCs. This is not to be confused with a Public Liability Company (PLC).

There are different types of Limited Companies, including Limited Liability Partnerships (LLP) and Special Purpose Vehicle (SPV).

Limited Companies pay Corporation Tax on their profits at 19%. This was due to increase to 25% as announced by Rishi Sunak but reversed by Kwasi Kwarteng on 23rd September 2022.

Corporation Tax is paid on total profits minus allowable business expenses. A property investment Co pays corporation tax on the profits made.

Limited Companies do not pay income tax or national insurance and are separate from the owners, directors and shareholders.

In the UK, all Limited Companies must be registered atCompanies House, and the information about Limited Companies is available on a public register for anyone to see when they are set up.

No restrictions exist on who may use a Property Investment business structure. You can set up an LTD today if you wanted, but we advise against setting up a Co without taking tax advice.

Setting up an LTD in the UK can include hairdressers, cafes, restaurants, manufacturers, and property-related activities such as property investments and property developers.

Use our free online corporation tax calculator to see how much you need to pay to HMRC as a UK limited Co-owner.

We have many clients who regret setting up their LTD as they realise they have the wrong structure in place. It is not SMART. We work very hard with landlords when setting up the right structure.

How to structure your shares in a SMART or Family Investment Companies (FIC)

A property investment limited company is simply an LTD formed by shares. This is important to know if you are setting up a new limited company for rental property for the first time and unsure what to do. You may hear them called by different names, such as

– Limited Liability Company, also known as LLP

– Private limited company also is known as PLC. This is not to be mixed up with Public Liability Company (PLC)

– Special Purpose Vehicle, also known as SPV

A property investment Co is a legally separate entity from you. This means any legal responsibilities are on the LTD, not the people associated with it. Sometimes, an LTD director waives rights to be held legally responsible. This is rare but important to know when setting up a legal entity.

It is not a simple matter of thinking of a name and starting a property investment limited company. It is that easy, but there are significant tax consequences for not considering the tax-efficient tax structure.

An LTD will have a name. Knowing what the name means and what it relates to is essential. Your Co will need a home, also known as a registered office. These are important aspects of your Co that you need to know when setting it up.

Shareholders of a property investment limited company

The shareholders of the limited company are their owners. Shareholders receive dividends when the private limited company makes money. They also risk that their capital could be lost if the business does not do very well. Shareholders are responsible for appointing a director, who in return is responsible for hiring and firing employees.

It is important to know who the shareholders are before you set up a buy-to-let Co.

Set up limited company online - should you do it?

It is possible to set up a limited company online. The question is this: “Should you set up a limited company online?“. It is possible to set up companies online, and they are cheap. The issue is that they do not set up Family Investment Companies (FICs) or SMATT company structures.

Using an online portal to set up your limited company will give you ordinary shares. This means there is no flexibility in how you extract cash out of a limited company. A company formed online does not protect you from Inheritance Tax (IHT) because they do not allow you to create freezer or growth shares.

By all means, use the online cheaper priced alternatives to set up a limited company, but think of the cost of getting it wrong when it comes to the patent of UK tax to HMRC.