Limited company

[cuddly61]

I suffer from mental illness and two years ago I lost my aunt it was a very traumatic time for me as soon as my sons who want nothing to do with me found out I was due to inherit one of them was hounding me to give them money he was ringing me everyday even the day after my aunts funeral so my mental state was in a terrible state .
My brother and I had been left my aunts house we decided to rent it out but then he started going on about forming a limited company pointing out how by doing this my sons couldn’t harass me to give them money by persuading me to sell the house and give them money from the sale.
And if the tenants had a accident in the house then they could only sue what the limited company was worth and they could take my own house. But then just before dec last year he sends me a email saying the accountants bill had come on and the corporation tax bill was due,
I was very upset he never mentioned any of this I don’t work and what I got from half the rent I was well under the income tax bracket .
I questioned him on whether he benefitted because he already owned his own buisness he got angry said he only did it to help me and I was throwing it back in his face. I shut up because I get scared when he gets angry he raises his voice. So after a while I asked if we could dissolve this limited company he got angry and said yes but I would have to pay all the costs this would incur making out it would cost a few thousand. But then I found out you can apply to have a limited company just struck off costing £10 . But all he has offered is to buy my half but I wanted to keep my half and just rent without being in a ltd company I feel like he tricked me into agreeing I kept telling him I had no understanding of buisness and things like that but he assured me it would benefit me .
It hasn’t I’m paying corporation tax that if I had agreed to this ltd company I wouldn’t be paying any kind of tax because I’m under the tax threshold ,I’m paying a accountants bill ok half of these two bills he pays the other half but I wouldn’t had had to pay them if we had just rented house out normally.
I feel like he has exploited me when I was most vulnerable with my mental illness .he has a lot more money than me the rent is just pin money to him .fact is I want out of this limited company because I feel he knew as I told him I didn’t understand anything about buisness etc is there anything i can do ? As he already has another buisness would forming this limited company had benefited him as he does pay tax .
He seemed very angry when I asked if we could dissolve it making the excuse yes but I would have to pay myself to do this costing thousands etc etc knowing I can’t afford thousands . So instead of getting 400 a month rent I know get 350 as the other 50 is being left in the company account for the next corporation tax and accountants bill .this is my only income so to loose that £50 a month is a lot of money to me.
Is there any laws against tricking a person with mental illness because that’s what I think he has done. I know he definitely doesn’t want to dissolve the company by the way he reacted .

I don't think anyone's tricked you. It just sounds like you didn't seek professional advice and didn't research different ways of ownership, taxes and other pros and cons. And now you still don't understand much and just focus on being hard done by over the £50.

And you shouldn't be getting money out of the company anyway - you should build up a buffer to cover repairs or bills if the tenants stop paying. Who is going to foot those bills? Or will that get dumped onto your brother to sort out too with you nothing but complaints and blame to offer?

I think you could approach your brother to see if he wants to buy you out. If you got a lump sum, you could have a trust set up. That would provide a small income but the assets would be protected from you frittering or giving them away.

Agree the best thing is for the house to be sold and you get your half or your brother but you out. You can't expect him to do all the work and then moan about not getting not as much money as you want.

Hi op - I don't know about the company situation but I do know about being taken advantage of with MH issues - and that it sounds to me as though your bother has done exactly this. He has not told you the full details and then when you question him he becomes very defensive and his behaviour is to undermine you. I'm sure you thought you would be able to trust him and that if he said he was doing this in your best interests this would be the case and no need for you to check out what he was suggesting.

I think the two replies here have no comprehension of MH issues and how it affects your ability to make decisions. I got ripped off by my solicitor in exactly this way during my divorce.

I suggest you speak to Citizens advice unless anyone can give you a more helpful solution than the two so far

@greenberet

Maybe you don't comprehend how things work either. The OP didn't want to give money to her children - the company protects her from that. If she gets payday loans which she can't pay back - the company protects the house from being auctioned off for peanuts to cover such eventuality. I think there's a good chance her brother has been doing his best - not too mention managing the property, accounts etc - he doesn't get a penny more for that but it literally is a part time job and a lot of stress for him. All he gets back is the OP bitching and feeling hard done by when she hasn't even lifted her finger to understand or do anything.

Hopefully, OP's brother will be open to selling the house and splitting the proceeds or paying her off. That way he'll get less work, less stress and less of this ungrateful attitude. And OP can suit herself.

@JoJoSM2 are you the Ops brother because you seem to know how he feels

The Op hasn't been given the full facts - she has MH issues doesn't mean she is stupid - she has asked questions to get a better understanding - it doesn't appear she has had the answers to the questions - just been in the receiving end of her brothers anger.

If he didn't explain things properly that's his error not hers - he's the one that knew how to do this as he's done it before -how do you know he hasn't benefitted from this situation and it looks like the accountant is doing the extra work not the brother - op doesn't say anything about payday loans - is this something you have come up with and why should she not feel aggrieved that she is being presented with bills that she did not expect or receiving £50 less than she anticipated.

The only person who would know this is the brother and for some reeason he chose not to tell her - is this to justify the "stress" or because he thought she would just accept it no questions asked.
I find your attitude comes across as pretty condescending and for some £50 can make a huge difference.

Luckily for you this doesn't appear to be your case

I agree that if the op is unhappy she could always take over the day to day running of the rental property.

Presumably OP is taking dividends out of the company, so there'll be personal tax on dividends through her self assessment return soon too on top of corporation tax.

If the OP has no other taxable income, she could be paid a wage of her share of rents from the company, meaning no tax on her.

She needs to take her own professional advice and make whatever changes are suggested to improve her own position. She was wrong to abdicate responsibility and let the brother sort it all out. He was probably doing what he thought best, but unless he is an accountant, he won't know all the options, nor could he have been expected to.

I don’t like the comment “ bitching” actually it was me who put in the physical hard work emptying a four bed house and cleaning and keeping the garden tidy he hardly lifted a finger. He says he got professional advice that putting it into a limited company was the best option. He employs a accountant to do the books . I just wanted to keep things simple just use a estate agent to go through to rent it out and split the rent. I have been sending emails to my brother but he hadn’t replied . I can’t make him strike off this company but then my only option is to sell my shares to him .its ok for him with all his money .i guess if he refuses to strike off then I will have to sell my share and put it in the bank .it was suppose to be a income monthly with a house to sell after so many years .

Op I hope you doing ok x

Cuddly, you can get an income from a range of investments, not just property. You just need to be realistic about the income that the pot of money will generate.

Tbh, it's unrealistic to just expect half the monthly rent. I've been a LL for a number of years and the cost of maintenance, professional fees, insurance, boiler packing in etc mounts up so it's not reasonable to build up a pot of a few thousand before you start taking money out of the rent (that's even with no mortgage).

If you arrange for your brother to pay you off or sell the house etc at least you won't feel like he's not doing sth in your best interest and he won't feel like you're ungrateful. It'll be much better on your relationship.

In terms of investing the money to generate income, you could get help from an independent financial adviser. The money could gradually go into stocks and shares ISAs - there's never any income tax on those investments but you can only pay in 20k a year.

Another option could be a private pension - even if you earn very little (or maybe even not earn at all?), you could pay in £2880 a year and the government would top it up by 25%. The lot would be invested until you retire. You could then draw the money tax free (up to the threshold).

So anyway, there are many ways to invest money (property currently not a great option anyway). In your shoes, I wouldn't mix business with family but get the cash out and then help from an independent financial adviser to invest wisely.

OP there is a lot of bad and ill-informed advice on this thread, it really isn't as black and white as selling the house or selling your shares - there are a whole host of tax implications for both, and the implications will depend on your other circumstances and how the Ltd Company was formed.

You've ended up (rightly or wrongly) in a complex situation, as an Accountant I'd urge you to get paperwork from your brother in regards the Company formation and structure and copies of the accounts, and go speak to a qualified Accountant or Independent Financial Advisor.

The issue is op that the money from the house isn't actually yours to spend, it's the ltd company's. Unless it's been set up with a paye scheme or the money has been a acounted for as dividends then every pennyneeds ti be accounted for. It's worthwhile speaking yourself with the accountant managing it.

I'm not surprised the brother is pissed off because he is probably liable for cgt if the property is taken out of the company, and he has more to lose if this happens. You would be hard pushed to get a better return on your money than property in both income and capital growth over a long period, depending upon where it is.

The house has only been in the company for 1-2 years as I gather from the OP. As only gains are taxable, there might not be a single penny to pay if they dispose of the asset. And anyway, the brother might choose to buy the OP out if he's well off.

OP, stay level headed, speak to your brother and accountant etc I don't think the situation is nearly as complex as it might seem. Good luck.