The number of owners interested in BTL properties through limited companies has increased.
More and more homeowners are looking to take advantage of the tax benefits that BTL offers.
A growing number of UK and international owners are choosing to register as a limited company to manage their portfolios and take advantage of the considerable tax benefits.
Thirlmere Deacon has seen an increase in international verses asking about the formation of a limited company, 62 percent year over year. Other findings are claimed to reveal that there were a limited record number of new businesses created in 2020, with 228,743 buying to allow businesses up and running.
Last year, there were a total of 41,700 buy-to-let businesses, a 23 percent fold in 2019. The numbers have more than doubled since 2016, increasing 128 percent, when tax changes to the owners were introduced. Between the beginning of 2016 and the end of 2020, more companies were established to hold buy-to-let properties than in the previous 50 years combined. Businesses created to hold buy-to-let properties were the second most common business founded during 2020, with businesses selling products online or by mail order first.
More than a third (34 percent) of all businesses set up to hold buy-to-rent properties in 2020 were in London. Together, London and the South East accounted for nearly half (47 percent) of all new additions.
“Tax benefits are an excellent incentive for homeowners.”
Stuart Williams, founder, and CEO of Thirlmere Deacon said: “If homeowners have a property in a limited company, they have the ability to offset 100 percent of the interest on the mortgage with the proceeds, whereas those who own property in your name they can offset just 20 percent. Investing in property through a business provides homeowners with higher levels of tax relief and personal tax savings. Homeowners can grow their BTL portfolio faster, as there is no cashback Income tax withheld, thus allowing more money to go back into the vest. Although corporation tax is paid on operating profits, this is lower than the highest in the tax rate to come.”
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