How to Organise Buy-to-Let Companies

An establishment of a buy-to-let (BTL) company can boost your tax savings and leave more in your jeans pocket. Having BTL properties in the name of a company and not in your sole name has the potential to categorise you into a lower tax band, which is especially useful for those with very high salaries who are eaten away by governmental taxes. The taxes are decreased in a buy-to-let property as there is no income tax to pay when registered through a BTL company. If the property is owned in your sole name privately, then the tax is deducted from your annual income. This becomes problematic if the money you make from the rental property causes you to end up in a higher tax bracket, making the profits almost irrelevant as you pay more in tax. If you register your property as a buy-to-let LTD. company instead however, you pay corporation tax. These properties are charged at a standard percentage at 19% (as of 2022), and do not endure fluctuation, despite the rental amount you earn monthly or the value of the property at purchase price. Furthermore, there are expenses that can be cancelled out such as mortgage interest costs, which are normally bundled with rental income and not separate for landlords renting privately. If you register your property through a buy-to-let company - the ‘interest rate’ you’re paying on your mortgage is considered ‘a business cost’, and thus, can be altered. 

Implementing a property to belong to a buy-to-let company is very straightforward, and it will not break the bank either! As a landlord you can register through the governmental business directory ‘Companies House’ on the website, or you can send the form back in person. The whole application process costs less than £15. 

What Will Be Asked Of You
Some of the details you’ll need to provide include the name of the company, and its HQ address (this can be your home address). During the registration process, you’ll be asked about who the directors are, and about anyone who owns shares of your company (or in this case, property). There should be at least one director, and the rest is up to you, regarding your colleague build. If someone owns more than ¼ worth of shares in the property/company, they should be registered as a person with significant control - (they still fall under the director.) You will need to provide the prestigious shareholder’s full name, and birthdate, along with their birth country. 

When filing your property as a buy-to-let limited company, the nature of the company’s operations will be asked about. You can describe it in one of the following ways:

It may fall under the 68209 bracket (other rentals and operations of property on a lease or owned outright), 68100 (sales and purchases of property), and finally, 68320 (managing a property contractually). After this has been completed, don’t forget to register for corporation tax within the first 90 days, and open a canny corporate bank account.