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Thank you

@Simon-Misiewicz-US-UK-Taxes

2 ай бұрын

You are welcome 🙏

good evening, thank you for your insight, im new to property investing but to start of with i will be private investing with a property developer so for example if i lend £40,000 and recieve that back with 7% interest which would be £42,100 6-9months later. what structures would i need to have in place to limit my tax hit because i was told i would need to file VAT tax because of earnings from my normal job income.

@Simon-Misiewicz-US-UK-Taxes

3 жыл бұрын

I am not sure why you have been told about VAT registration because it has no bearing at all on the interest you received compare to the income you earn elsewhere If you lend money to your limited company then some of the interest may be received by you tax-free You can also use a director loan ISA account to put the interest into your ISA tax-free

Ok. I hear what you are saying....but. Isn't the gain when the property moves from personal ownership to LLP outside CGT? If the value of the property is calculated when it moves from personal ownership to LLP, then the gain could be encapsulated at this point, with a very small gain when it is sold shortly after being incorporated

@Simon-Misiewicz-US-UK-Taxes

3 жыл бұрын

The capital gain would be based on the sales price less the market value in which the property was incorporated. Back to your point the capital gain is minimised. The issue is whereby people then sell the shares of the limited company which then brings forward the capital gain that was originally relieved as part of the process. As you can see it is a very complex process and not one that can be easily understood really on KZread forms such as this this

Hi Simon. What about a LLP structure where the partnership is between individual and LTD company as a alternative to Incorporation to manage section 24 issues.

@Simon-Misiewicz-US-UK-Taxes

2 жыл бұрын

Hi I hate to say this but the hybrid structure for tax purposes is considered as tax evasion by HMRC under GAAR

@Simon-Misiewicz-US-UK-Taxes

2 жыл бұрын

That is correct. An LLP is taxed in the same way as individuals. What I mean by that is LLP is our tax that income tax rates not corporation tax rates. LLP is still subject to section 24

If you have property trading business in serviced accommodation and move it from your own name into an LLP. Run it in the LLP for three years and then incorporate into a limited company. Won't this get around any capital gains tax if you then sell the property after six months of being in the limited company?

@Simon-Misiewicz-US-UK-Taxes

3 жыл бұрын

If you incorporated your property portfolio into a limited company it will indeed bypass some of the capital gains tax issues. You do need to bear in mind that capital gains tax will be suffered when you sell the shares of your limited company, if you want to take money out of your company through the sale Given the example you have mentioned the capital gains tax will also be reduced. This is because the market value of the property would be taken into account not the original purchase price when the company sells it. This means there is less profit and less tax

What about FIC as opposed to Limited Co or LLP ?

@Simon-Misiewicz-US-UK-Taxes

3 жыл бұрын

A family investment company is nothing more than a limited company. It is a great marketing term but it just references the structure of shares to include family members

@Bob_too

3 жыл бұрын

Yes, that’s what I think is important. A version of a limited company but that better enables passage and continued ownership of family wealth for future generations but with structured control over future years when the founder of the company is not around. Is this where the FIC has an enhanced structure of the base Limited Company ?

@Simon-Misiewicz-US-UK-Taxes

3 жыл бұрын

A family investment company has greater flexibility once you understand the laws and the tax incentives to create different types of shares. There are ways to protect those shares from your kids and the sponsors of your kids too.

5:59 What if you took the ltd company profits out as dividends rather than salary? Would it still be worse tax wise then?

@Simon-Misiewicz-US-UK-Taxes

3 жыл бұрын

I would not want to say better or worse but different Salary helps you reduce corporation tax but carries a greater % of income tax. Dividends does not help reduce corporations tax but has a lower % income tax than a salary Does that help?

@ProWhitaker

3 жыл бұрын

@@Simon-Misiewicz-US-UK-Taxes you've blown my mind, so a director salary is an allowable expense, reducing the company net income to zero and pay no corporation tax, (although you would want some profit so you could have a dividend) and yes thanks that did help.

@Simon-Misiewicz-US-UK-Taxes

3 жыл бұрын

Indeedy!! 👍

@Bob_too

3 жыл бұрын

So a combination of Salary within a band to maintain draw below 40% band and combined with Dividends above. But also where available paying back some Directors Loans from the original incorporation (assuming that was the mechanism) ? I see I need a personal consultation to do the math for my scenario and to consider future IHT case and intergenerational wealth planning.

@Simon-Misiewicz-US-UK-Taxes

3 жыл бұрын

www.optimiseaccountants.co.uk/ Feel free to use the coupon code KZread20 to get 20% discount You are right in regards to split of wages and dividends