Using a Property Company to Save Tax

By: Carl Bayley

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Product code: 22028
ISBN: 1904608272
184 pages
Format: Pb
Published by: Taxcafe UK Ltd, 2005, 5th edition

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Using a Property Company to Save Tax - front page cover image

Description of Using a Property Company to Save Tax

There are lots of reasons for starting your own property company but probably the most important one is to SAVE TAX.

The examples in this book show that you could earn around 46% more profit by using a company to invest in property.

There are also a number of traps to avoid and pitfalls to negotiate so it is essential that you arm yourself with all the relevant facts.

The book is written in plain English and contains numerous examples and tax planning tips. Subjects covered include:

. How to go about setting up and running your own company.
- Detailed comparisons of company versus private property ownership.
- How to achieve an instant increase in your after-tax rental income.
- How to transfer existing properties into a company.
- The non tax benefits of using a company.
- How to borrow money in the most tax efficient way.
- Detailed tables of company tax savings.
- How to minimise tax on your capital gains.
- Tax benefits of property management companies.
- Advice for both property traders and buy-to-let investors.
- How to sell properties or the whole company and pay the minimum tax.
- A-Z of corporation tax, clearly explained.
- A-Z of stamp duty and VAT.
- Detailed examination of the dangers and drawbacks and how to avoid them.

Using a Property Company to Save Tax - Chapter headings

1. Why Use a Company?
1.1 Introduction
1.2 Why the Government Likes Companies
1.3 Non-tax Reasons for Using a Company
1.4 Overview of Company Tax Pros and Cons

2. Plain English Guide to Company Tax
2.1 What Taxes do Companies Pay?
2.2 Corporation Tax in Plain English
2.3 The Impact of Dividends on Corporation Tax
2.4 Save Thousands in with 'Marginal Rate' Planning
2.5 Paying Corporation Tax
2.6 Cash-flow Benefits of Using a Company
2.7 Company Tax Returns

3. Different Types of Property Company
3.1 Introduction
3.2 Property Investment/Letting Companies
3.3 Property Development Companies
3.4 Property Trading Companies
3.5 Property Management Companies
3.6 Companies With a 'Mixed' Property Business

4. Property Rental Income and Expenses
4.1 Corporation Tax on Rental Profits
4.2 Expenses You Can Claim
4.3 Capital Spending You Can Claim
4.4 Furnished Lettings
4.5 Furnished Holiday Lettings
4.6 Tax Treatment of Rental Losses
4.7 Other Property Investment Income
4.8 Lease Premiums

5. Property Trading Income and Expenses
5.1 How Property Trading Profits are Taxed
5.2 Trading Profits versus Rental Profits
5.3 Properties as Trading Stock
5.4 Capital Allowances for Trading Companies
5.5 Trading Losses

6. Corporation Tax on Capital Gains
6.1 Introduction
6.2 How to Calculate the 'Proceeds'
6.3 How to Calculate the 'Base Cost'
6.4 How to Calculate the 'Indexation Relief'
6.5 Making the Most of Capital Losses

7. The Importance of Taper Relief
7.1 Shares Held Since 6 April 2000
7.2 Shares Held Before 6 April 2000
7.3 So What's the Big Deal About Taper Relief?
7.4 Shares Held Before 6 April 1998
7.5 Shares only Sometimes 'Business Assets'?
7.6 Shares Transferred Between Husband and Wife or
Between Civil Partners

8. Stamp Duty for Property Companies
8.1 Introduction
8.2 Stamp Duty on Shares
8.3 Goodwill
8.4 Stamp Duty Land Tax
8.5 Stamp Duty Land Tax on Leases
8.6 Disadvantaged Areas
8.7 Application to all UK Property

9. VAT and Property Companies
9.1 VAT on Property
9.2 Residential Property Letting
9.3 Commercial Property Letting
9.4 Residential Property Sales
9.5 Commercial Property Sales
9.6 VAT on 'Build to Let'
9.7 VAT on Conversions
9.8 VAT for Property Management Companies
9.9 Interaction with Corporation Tax

10. Saving Tax When You Extract Profits
10.1 Profit Extraction Principles
10.2 Salaries, Etc
10.3 Dividends
10.4 A Major Wealth Warning for Husband and Wife Companies

11. Personal vs Company Ownership
11.1 Introduction
11.2 Rental Profits Kept in the Company
11.3 Rental Profits Extracted from the Company
11.4 The 'Optimum Scenario'
11.5 Higher Rate Taxpayers
11.6 Extracting Profits Revisited
11.7 Trading Profits
11.8 Capital Gains

12. Making the Big Decision
12.1 The 'Big Picture'
12.2 Types of Property Business Revisited
12.3 The Rental Income Position
12.4 What About Taxpayers on Lower Levels of Incomes?
12.5 Reinvesting Rental Profits
12.6 Capital Gains
12.7 Winding Up the Company to Reduce Tax
12.8 If the Company Still Holds Property When Wound Up?
12.9 Reinvestment - Enormous Long-term Tax Savings
12.10 Retaining the Wealth
12.11 Long-term Reinvestment Conclusions
12.12 The Benefits of Reinvestment for a Trading Company

13. How to Set Up Your Own Property Company
13.1 Who Can Help and How Much Does it Cost?
13.2 The Company's Constitution
13.3 Changing Your Company's Accounting Date
13.4 Choosing an Accountant or Auditor

14. How to Put Existing Property into a Company
14.1 Introduction
14.2 'Trading' Businesses
14.3 Furnished Holiday Lettings
14.4 Property Investment/Letting Businesses

15. Borrowing the Tax-efficient Way
15.1 Introduction
15.2 Who Should Borrow the Funds?
15.3 Borrowing to Invest in Shares
15.4 Borrowing to Lend to the Company
15.5 Corporate Borrowings

16. Some Important Tax Issues
16.1 Close vs Close Investment Holding Companies
16.2 The Dangers of Private Use
16.3 Selling the Company the Tax-efficient Way
16.4 Benefits and Dangers of Multiple Companies
16.5 Property Management Companies
16.6 Commercial Investment Properties
16.7 Becoming Non-Resident
16.8 Changes to the UK Tax Authorities
16.9 Husbands, Wives and Civil Partners

17. Weighing It All Up

18. Future Tax Changes

Authobiography of Carl Bayley

Carl Bayley is an expert at translating complex tax laws into plain English and helping investors and businesses pay less tax. Trained as a chartered accountant, Carl is a well-known conference speaker and a regular contributor to television and radio on tax matters.