Following the changes introduced by the 2015 Summer Budget there has been an increase in investors looking for alternative solutions to holding properties as investments. Buy to let property owners are now purchasing properties through companies.

There are differences in taxation when owning property as a person or as a corporate entity.

If you let a property in your personal name, any rental income is added to your tax return and you pay the correct level of tax. Holding property in a limited company means that corporation tax is due on the profit and personal income tax is only due when you withdraw the profit from the company.

The main benefit from keeping the property in a company name is the flexibility it provides when extracting profit. The owners of a company will normally take profits in the form of dividends.

When making a dividend payment you can decide-

How much to pay – You do not have to withdraw all of the profit immediately.

When to pay – You may leave profit in the company to extract at another time.

Who to pay – Additional shareholders can be added to the company. This may be partners or family members.

Flexibility in distributing profit may reduce your tax bill. However, you should seek advice from an accountant before making any decisions.