Hope you have all had a great xmas

Looking to the year ahead, i want to talk about asset protection

if buying properties to BTS and BTH (buy to hold), Is it wise to buy properties in a company name or personal names? are ltd companies a good idea?

What other tips can people offer for protecting assets and wealth for example to limit tax etc...

Is it correct that if you do a BTS you only pay Income tax and not CGT?

Thanks in advance

Dave

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Hi Dave,
The pros and cons of holding property in a Ltd Co have been discussed on this forum at length in the past, so try some key words to try to find the posts.

IMHO, it is a matter of scale and intent, and it is probably never too late to incorporate, but sometimes may be too early.

Subject to accountant advice, it is my understanding that a property purchased with the intent to buy and sell is treated as a trade, and is therefore subject to income tax, not capital gains tax. A property purchased with the intent to let, but subsequently sold MAY be assessed as a capital gain, but you have to prove certain circumstances.

It's important to note that you don't have to mortgage properties in the name of the Ltd Co to control them within the Ltd Co for the purposes of income tax. You can mortgage in personal names, and have the Ltd Co report on the income and expenditure of the properties. As I am sure you will know, Ltd Co will have no annual CGT allowance against sales for which CGT is applied.

I'd say, in summary, that at the time you know your property business will benefit from being treated for tax as Ltd Co, and not as personal income, register a Ltd Co and start accounting for all property income and expenditure via that Ltd Co. Until then, it's probably a big burden of reporting and an unneccessary cost to do so.

We incorporated since our arrival in the UK because we combine other business with our property portfolio, and we pay all our salaries and dividends to ourselves from our UK company. There was never an intent to "protect" our assets (or ourselves FROM our assets) in doing so, and although many "advisors" may advise you (for a fee) to protect your personal assets from your Ltd Co and vice versa, I guess I've always been too dumb to contemplate either corporate or personal failure from the outset. Let me tell you there's nothing that sharpens your focus on survival more than knowing that your business decisions WILL be detrimental to your wealth. So I started off as I meant to carry on, and touch wood, we're still here after 11 years (and so is the other company we left behind in 1999, still accumulating unpaid dividends for if and when we ever re-expatriate).

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Yeh im thinking about this now as it maybe costly to tranfer exsisting property into a ltd company, also was wondering which way would reduce the amount of tax i pay, the rental income im guessing i could draw out as dividends every month.

Il do some research on here

So your other Businesses are not seperate from your property portfolio?

Thanks Gerry

Dave

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Contact me for ready made deals northwest-REAL CASHBUYERS WANTED

'The brave may not live forever...but the cautious do not live at all' richard branson
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You do not need to transfer the existing properties into the Ltd Co. Just start reporting all income and expenditure for all the props in the new Ltd Co.


Yes, if you have no other source of earned income in the UK, pay yourself £500 or £600 pcm salary and pay remaining net income as dividend to yourself, until you reach your 40% tax threshold, then it's another game. We have managed (for good or for bad) never to pay more than 20% income tax in ten years in the UK.

Our UK businesses are joined at the hip, but will be separated within 2 to 3 years (as you say, for asset protection) but to date we did not have the luxury to consider doing that. It's in our minds and our plans.
Our Dubai business is completely legally separated, and so is our Syrian business. We bank in five countries (with two other country accounts dormant since ten years ago - just in case global macroeconomic politics gets turned on its head). Look at my signature at the foot of this post. It's not for nothing I remind myself of that. And just for good measure, my wife maintains a certain holding of gold (physically in two countries) in the event it all hits the fan globally. It's enough to survive for a few months.

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