Property investment is investment in property for long term capital growth as well as receiving rental income on the property for the period until it is disposed of.

It is very similar to Buy to Let property investment but is normally carried out through a limited company.

Using a limited company can have tax efficiencies as the full amount of any mortgage or loan interest is deductible from the rental income before tax is calculated. This differs from an individual where interest is only allowable at an effective 20% tax rate meaning the anyone with rental income and mortgage interest who is not a basic rate taxpayer is losing out on the tax calculation.

In a limited company the full interest is deductible and the profits are subject to corporation tax of between 19% and 25%. The profits do not need to be distrusted immediately meaning a shareholder can decide on the best time to extract funds from the company.

UK property investment companies are vehicles to help UK landlords to invest in property to be rented out. The companies can specialise in various types of different portfolios like purpose-built student accommodation, HMOs, traditional residential property, and off-plan.

It is possible for almost anyone to set up a limited company online. Online web sites will provide you with all you need to set up a general company. However they will not provide you with all that you need to set up a property company with the most efficient structure.

There are what are known as SMART or Family Investment Companies (FIC), which are just the same as other limited companies, but they have different classes of share capital, each with different rights associated with them. This enables dividends to be paid to different shareholders, using what are known as alphabet shares, so that extraction of profits from the company can be done in the most tax efficient manner. It also allows for future tax planning for Capital Gains Tax (CGT) and Inheritance Tax (IHT).

The setting up of a property investment company is a specialised type of work. Companies need to be set up correctly to avoid administration and tax problems in the future.

We have experience with setting up bespoke property companies so speak to us when you are ready to start investing.


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