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Limited company BTL

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A limited company BTL is becoming increasingly popular due to the improved tax efficiency.
Whether is it is already a trading company, or a newly set-up SPV (Special Purchase Vehicle) or an LLP (Limited Liability Partnership) we can help.

SPV (Special Purchase Vehicle)

Some lenders require the company be defined using the following Standard Industry Classifications (SICs):

  • 68100 – Buying and selling own real estate
  • 68209 – Other letting and operating of owned or leased real estate
  • 68320 – Management of real estate on a fee or contract basis

You should always speak to a qualified accountant about the type of company you’re creating. It’s also worth asking your tax adviser whether the company should be a Special Purpose Vehicle (SPV).

In LLPs (Limited Liability Partnerships) you will not be personally liable for any debts held by the company, however, lenders will require you to be the personal guarantor.

Benefits of having BTL in Limited Company:

  • Setting up is simple and quick
  • Future planning can be easier
  • Expanding portfolio is a lot quicker
  • Pay corporate tax and not Income tax on your rental income
  • Certain expenses can be deducted when BTL is held in a company
  • Could also have a Limited Liability company

Disadvantages of having BTL in Limited Company:

  • No Capital Gains Tax Allowance
  • Additional cost of running a Limited company
  • Higher Mortgage Rates & arrangement fees
  • Limited with the choice of Lenders

Your property may be repossessed if you do not keep up with repayments on your mortgage or on any other secured loans.

There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage. 

There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% of the amount borrowed, but a typical fee is £495.

Some buy to let mortgages and commercial mortgages are not regulated by the Financial Conduct Authority.