Is setting up a limited company the right choice for you as a landlord?

Setting up and running a limited company can be more complex than managing your properties as an individual, but there are several resources available to help you navigate the process. You'll need to register your company with Companies House, set up a business bank account, and file annual accounts and tax returns. You may also want to consult with an accountant or solicitor to ensure that you are setting up the company correctly and meeting all legal requirements.

When you sell a property under a limited company there is no personal capital gains tax, whereas you have an allowance when you sell a property as an individual. One of the main things you need to consider is the property transfer costs, transferring your existing portfolio into a limited company will incur stamp duty, legal costs and possibly capital gains.

One thing is for sure the last few years have been challenging for landlords, with so many changes we know that you may be looking at options. Setting up a limited company to manage a rental portfolio is becoming increasingly popular in Bath as it could be a way to grow your property portfolio while minimizing your tax liability. Before you take this step, is setting up a limited company the right choice for you as a landlord?

First, let's define what a limited company is. A limited company is a separate legal entity from its owners, meaning that the company can own assets, incur debts, and conduct business in its own right. As a landlord, you can set up a limited company and transfer your rental properties into it. The company would then become the legal owner of the properties, and you would be a shareholder and director of the company.

We always advise that you seek for advice from professionals as they are in the best position to assess your portfolio and also your future plans. By working with tax and independent financial advisers they help you grow, and run your portfolio in a financially efficient way. With all the changes and options available to you we can recommend such professionals if you are looking for a rental portfolio health check.

Managing your portfolio as an individual means that you retain some privacy, the accounts for your properties and tax documents are between you HMRC and your accountant. Once you switch to a limited company your accounts have to be published and as such are available online at companies house. We know that privacy is very important to some of our landlords, and this is certainly one of the concerns for switching to a limited company.

As with all major decisions when it comes to operating your rental properties through a limited company there are pros and cons. At The Apartment Company we always talk through any big decisions you wish to make to your portfolio as there may be things you are not aware of that need to be taken into account. While setting up and running a limited company can be more complex than managing your properties as an individual, there can be benefits. Always seek professional advice before you make the move.

If you could like to explore switching your portfolio to a limited company, please contact Nicola and the Lettings team on 01225 303870.