What is the most tax-efficient method of owning 10 properties when you also receive a salary under PAYE: company or personally?
Arthur Weller replies:
Generally, it is always best to avoid artificial arrangements. However, if we are talking about 10 properties that are producing rental income, almost certainly this will push the landlord into higher rates of income tax. A company has certain advantages: (a) Instead of 40% or 45% income tax on the rental income profits, the company will pay (currently) 19% corporation tax; (b) Companies are not restricted from claiming interest relief for residential properties; (c) Other people can be made shareholders of the company, and with separate classes of shares dividends can be paid out in a tax-efficient way; (d) Avoiding personal higher rate income tax will help with regard to the high income child benefit charge. But obviously, there are also disadvantages in company ownership. The alternatives need to be considered in detail.