Setting up limited company

[boomboom]

Hi Guys

Newbie to the forum- hope all are well.

i have a question which i hope someone can help with. i am sure it is relevant to people on the board and someone will be able to give me some advice or things to consider

There are a group of 4-5 of us who are looking to put say £25-£30k each into buying around 5 buy-to-let properties. these would also be mortgaged. the issue we have is whether we should do this through a partnership or whether we would be better setting up a company and buying the properties through the company. 2 of us are higher rate tax payers in our current jobs.

we would look to over the next few years increase the number of properties that we have.

it would be good to get people's thoughts on advantages of a partnership over limited company and vice versa.

all help is gratefully recieved and i thank you all in advance

[Melboy]

I have to say......and please don't be offended by my reply......your business plan would be the last thing I would ever want to enter into.

Why?

These type of business set-ups rarely succeed and can be fraught with problems and in house disagreements over policies, forward planning etc. etc.

Better to be the Lone Ranger Landlord in my view......live and die by your own efforts and mistakes.

Mel.

[Trenners]

Hi,

I agree with Melboy ........ better to be a lone landlord .... but ... if you do go down this route then a Limited Company is probably the right way to go ... a few thoughts below. Remember .. I am a landlord .. not an accountant ...

1) If you create a Limited Company then all income and expenditure belongs to THE COMPANY. So, your personal tax positions will not be affected until such a time as you draw money from the company via dividends or salary. You will pay corporation tax on any profit (derived from rent exceeding expenditure).

2) Companies do not have a Capital Gains Tax allowance. So, any profits you make from the capital appreciation of the property in the future will be subject to Corporation Tax at the prevailing rate (with no CGT allowances).

3) Loans to companies are more expensive than loans to landlords and the Directors will need to personally guarantee them.

So, to summarise the above, your costs will be higher and your tax allowances will be lower ..... which leads us back to Melboys advice .... GO IT ALONE.

Good Luck

Mark

[boomboom]

thanks for the replies guys.

its the old never go into business with friends and family.

All of us have known each other since we were children......so u are looking at over 20 years. but i tiotally see your points guys.

but each of us have decent amount we can put in........so not sure which way to go