{"id":3195,"date":"2017-03-02T10:47:32","date_gmt":"2017-03-02T10:47:32","guid":{"rendered":"https:\/\/dev.withcreative.co.uk\/lforl\/?p=3195"},"modified":"2017-03-02T10:47:32","modified_gmt":"2017-03-02T10:47:32","slug":"governments-tax-changes-ready-bite","status":"publish","type":"post","link":"https:\/\/dev.withcreative.co.uk\/lforl\/governments-tax-changes-ready-bite\/","title":{"rendered":"The Government\u2019s tax changes are ready to bite"},"content":{"rendered":"

\"Tax\"<\/a><\/p>\n

Announced in 2015, the Government\u2019s changes to Mortgage Interest Relief start to bite from this April. If you recall our blog from last summer \u2013 read it here<\/a> \u2013 you\u2019ll know that these changes will catch out any landlord who has a mortgage on the property they let and who pays tax at the higher 40 per cent rate.<\/p>\n

There is a way around it. By incorporating your property rental business, you\u2019ll be paying corporation tax on your profit after you\u2019ve deducted all the mortgage interest \u2013 and current corporation tax rates stand at 20 per cent.<\/p>\n

Should you do it then? Well, recent figures from the National Landlords Association suggest that more and more landlords are opting for limited-company status.\u00a0 In January 2016, 1 per cent of Landlords had formed a limited company over the previous 12 months. In January 2017, the figure has risen to 6 per cent. It\u2019s still a small proportion, but it\u2019s a huge increase.<\/p>\n

If you decide to follow suit, you\u2019ll be faced with several decisions and a number of costs. You may have to pay fees to set-up a suitable commercial loan to replace your existing mortgage deal. You\u2019ll be liable for capital gains tax, stamp duty and legal costs relating to the sale of your property to the new company. There could be financial penalties for early redemption of your mortgage.\u00a0 Add to that the admin and accounting costs of running a limited company, and the tax savings might not be quite so attractive.<\/p>\n

It\u2019s one of those situations when the answer depends on the scale of your portfolio, your income levels and the proportion of mortgage debt to equity.\u00a0 It\u2019s not one-size fits all.<\/p>\n

To make matters more confusing still, we\u2019re in an evolving situation. The Government isn\u2019t likely to sit back quietly while large numbers of landlords incorporate their businesses to save on tax. It could be that a review is on the cards. Take advice, by all means, but keep your eyes and ears open for hints on changes in the policy. And, of course, don\u2019t forget to tune in to the Spring Budget which takes place on March 8.<\/p>\n

Follow our blogs<\/a> for all the latest property rental news.<\/p>\n","protected":false},"excerpt":{"rendered":"

Announced in 2015, the Government\u2019s changes to Mortgage Interest Relief start to bite from this April. If you recall our blog from last summer \u2013 read it here \u2013 you\u2019ll know that these changes will catch out any landlord who has a mortgage on the property they let and who pays tax at the higher […]<\/p>\n","protected":false},"author":2,"featured_media":3197,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[],"yoast_head":"\nThe tax benefits of incorporating your property rental business<\/title>\n<meta name=\"description\" content=\"By incorporating your property rental business, you\u2019ll be paying corporation tax on your profit after you\u2019ve deducted all the mortgage interest\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dev.withcreative.co.uk\/lforl\/governments-tax-changes-ready-bite\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" 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