Forming a Limited Company

[Jacob Oliver]

Please could somone direct me for me learn about the pros and cons of moving my portfolio of properties to a limited company.

I appreciate that Building Societies will not allow BTL properties to move to a limited company so I imagine the only route I could take is to consolidate all my proerties into one loan and which would then be "owned" by the newly formed limited company.

However I understand that at the time of transfer from my own personal name to the limited company I would be personally be liable for CGT - is this correct ?

Could someone please point me in the right direction - I am fed up with negative comments for acccountants

[lawstudent]

To transfer your portfolio to a limited company you will effectively have to sell it to the company. The company is legally a separate entity from you, so you will in effect be disposing of the portfolio just as though you were selling it to another person. Whatever price your company pays you for it you will be deemed to be disposing of it at market value. so even if you give it to the company free of charge you will not save any CGT! Ultimately the true value will be decided by negotiation between you and the IR district valuer. You will be liable for CGT on any gain you have made in excess of the annual exempt amount, subject to all the usual rules re indexation and/or taper relief.

[P.Pilcher]

You may be confusing here the idea of forming a limited company to own your properties (with the drawbacks explained above by lawstudent) and the formation of such a company to manage your properties. Here the company collects the rent, pays the costs and mortgages. You can collect your income under the paye regulations and the tax rules for chargeable expenses are more lenient than they are for a small trader. Tax has to be paid on all profits however, the cost of drawing up and filing the annual accounts is greater than a sole trader so there is a swings and roundabouts aspect to consider. Professional advice is really necessary if you want to consider this.

P.P.