Buy-to-let with Ltd company?

[Eatingallthemincepies]

I’m trying to decide whether to buy a buy-to-let with a Ltd company, with the hope of this being the first of a few for my pension. Could anyone kindly help me understand the costs of buying/running/selling of owning under my own name vs under a Ltd company?

I am currently self-employed and about to reach a 50k salary so it may be more tax efficient to become a Ltd company anyway. My plan is to save £15k per year for the 1st deposit (I have no pension so am anxious to prioritise this and DH’s salary is enough to live on). If I have a Ltd company then I can leave the £15k in the company and not draw it out as dividends, and therefore not pay dividend tax on it, which saves about £4k tax a year! Then when I have enough saved in the Ltd company’s account then I can with that as the holding company. Obviously that’s a huge tax difference at that point but I want to understand then what would happen if I bought it with a Ltd and I’m confused!

Also I heard something strange, that you can’t buy a buy-to-let with a Ltd if you’re a first time buyer?! Our family home is in my husband’s name so technically I am a first time buyer!

Please may anyone help or even if you could steer me where to get advice? I can’t really ask the accountant for more before I decide if to go ahead. Thanks very much in advance!

You will need 25 percent for the deposit plus solicitors fees and you'll probably be asked by lender to sign a legal document stating if Ltd company cannot pay mortgage you will personally be liable to pay it. This can cost between £725-£1000 per person. You will need a minimum of 2 directors. You can set a Ltd company up on line it cost about £50. The initial money you put down as a deposit for the first property you can draw back from a Ltd company account as a repayment of the directors loan that you gave to the Ltd company so it could pay a deposit. You won't pay tax on this. Anything extra hours draw down from Ltd company will be in dividends as you will pay tax from. You can write off the mortgage interest costs against tax for Ltd company but not for an individual buying a btl property instead an individual gets a 20 percent and tax credits. If you pay 40 percent tax you'd be better off as a Ltd company. Be aware you will have to follow strict legislation including electricity certificates every 5 years, EPC should be currently E or above but may because C or above very shortly. This for btl properties must be re done every 5 years but 10 years for private householders, gas certificate annually and should not lapse even by a day, How to Rent must be given to tenants every time they sign new contract. You'll also need insurance for both the building and in case tenant does not pay. There will be accountancy fees, financial advisor fees, standing utility charges and council tax for void periods. You may also have to pay a licensing fee depending where you live and property you buy. Also it is wise to get an EA to vet any potential tenants for their credit ratings and ability to pay rent. Seek a guarantor if at all possible.

Thanks you @caringcarer for all that great info !

Does anyone know how the costs compare of doing it under my own name vs under a Ltd company? Or where I could find out please?

Contact local accountants and pay for advice, it will be worth it.

(I’m a tax adviser!)

If you pay 40 percent tax you'll gain by going through a Ltd company. Also if you plan longer term to add more than btl you'll gain by going through as Ltd. company. If you pay 20 percent tax and don't want more than 1 btl there won't be much difference.