Since the June 2010 Budget, it has become much more attractive for investors to use a company in their investing.  However, transferring existing property into a company usually (though not always), means a hefty Capital Gains Tax Bill, as well as Stamp Duty, which makes a straight transfer into a company unviable.

An alternative is to use Deed of Trust arrangement, to transfer the beneficial ownership of the property to a company.  This is a simple agreement between investor and company that the company (owned by the investor) will benefit from all aspects of the property, in return for the company taking full responsibility for the property.

This allows the profits and gains associated with the property from that point onwards to be taxed via the company, not the investor.  A side benefit is that investors can usually raise higher Loan to Value mortgages than companies.

Of course, this isn’t a solution for all investors – mainly as rental profits then needed to be extracted from the company tax –efficiently.  But, for Higher Rate taxpayers who are now making significant rental profits, using a property company can save thousands in tax – and that’s before the reduction on corporation tax, and increased allowances, coming in 2011.

Contact Stephen Fay ACA at Fylde Tax Accountants for specialist advice on all aspects of property tax:

Tel: 01253 350 123
Email: stephenfay@fyldetaxaccountants.co.uk