Moving Property to a LTD Company | Accountant & Mortgage Advice

Podcast Hosts:

Gemma – Host
Ifthiaker (Ifthi) – Accountant and Mortgage Advisor

Introduction

Gemma:
Today, we’ll take you through the steps to move a property from your name to a limited company.

Q&A Discussion

Q1: Why Would Someone Move a Property from Personal Name to a Limited Company?
Ifthi:
The main reason is tax efficiency.
Section 24 has changed how mortgage interest is treated for individuals:
Example:
Individual earns £10,000, pays £3,000 interest
Old system: Profit = £7,000 → 40% tax = £2,800
Section 24: Tax = £4,000 – £600 rebate = £3,400 → £600 more tax
Limited company route:
Profit after interest = £7,000
Corporation tax (19%) = ~£1,330 → significant savings
Important: Tax situations vary; always consult an advisor for dividends, allowances, and personal circumstances.

Q2: How Easy Is It to Set Up a Limited Company?
Ifthi:
Can be done via Companies House for £13.
Caution: Seek advice before setting up:
Company structure depends on shareholding, director loans, and capital sources.
Incorrect setup can reduce tax efficiency.

Q3: How Easy Is It to Maintain a Limited Company?
Ifthi:
Individual: Self-assessment tax return
Company: Requires more administration
Separate bank account
File accounts with Companies House
File corporation tax return (XBRL format; accountant usually required)
Typical accountant fees for simple structures: £40–£50/month
Tip: More work than an individual, but manageable with professional support.

Q4: What Should I Be Mindful of When Moving the Property?
Ifthi:
Must sell the property to the company (cannot remortgage)
Requires two solicitors for sale and purchase
Mortgage interest rates may be higher for company loans
Possible capital gains tax when transferring the property
Consult an accountant to maximize allowances and reduce tax liability

Q5: How Does Capital Gains Tax Work?
Ifthi:
Transfer to company may trigger capital gains tax:
Example: Buy £200,000 → transfer to company at £250,000
CGT payable on £50,000 profit (minus allowances)
Allowances:
Primary residence exemptions
Joint ownership doubles allowance
Costs of renovations/extensions may reduce CGT
Future sale by company:
Corporation tax (19%) on gains
Dividend tax may apply if funds are withdrawn
CGT already accounted for when moving property

Q6: How Does Stamp Duty Work for Limited Companies?
Ifthi:
Company purchases are treated as second properties
Additional 3% stamp duty applies on top of standard rates
Elect-to-buy scenario:
Moving primary residence to company and buying a new home may reduce additional stamp duty
Always seek legal advice to confirm eligibility

Q7: What Is “Let-to-Buy” vs “Buy-to-Let”?
Ifthi:
Let-to-buy: Convert your primary residence into a rental property and buy a new primary home
Buy-to-let: Purchase a property purely for investment (not tied to your residence)
Key difference: Let-to-buy involves your current home; buy-to-let involves separate investment property

Closing Remarks

Gemma:
These tips may not apply to everyone; always speak to an advisor if unsure.
Reminder: A mortgage is secured against your home or property and may be repossessed if repayments are missed.