Landlords ask brokers about moving their properties into a company. The lending you can advise on, the tax and estate questions you cannot, and why a landlord's retirement plan belongs in the same conversation.
Individual landlords cannot deduct mortgage interest from their rental income when working out their tax. Under Section 24, they receive a tax credit at the basic rate on their finance costs. A higher-rate taxpayer with large mortgages can pay tax on rental income the properties do not generate in cash.
A company deducts its finance costs when working out its taxable profit, and pays corporation tax on the profit. That difference leads landlords to ask whether they should move their properties into a company, and the question reaches their broker because it involves new mortgages.
Moving existing properties into a company means selling them to it at market value.
for the landlord on any gain, unless incorporation relief applies. That relief can apply where the letting amounts to a business, which depends on the facts and the work involved.
for the company on the purchase, at the rates for additional properties. Some partnership structures can change that position, and they need specialist tax advice.
in the company's name, and early repayment charges on the existing loans.
on each property.
The tax side belongs with an accountant or tax adviser. The mortgages are yours.
Limited company buy-to-let lending is its own market, with lenders that assess rental cover on the property and the directors' circumstances. Lenders will usually ask the directors to give personal guarantees.
For a landlord with several properties, the timing of the move depends on when each existing deal ends. Moving properties one at a time as deals expire avoids early repayment charges, at the cost of a longer transition. Set out the lending timetable and costs for the landlord and their tax adviser.
Rent received by a company belongs to the company. The landlord takes it out as salary, dividends or repayment of a director's loan, and each is taxed differently. Landlords who rely on rental income to live on need to see the tax on extraction alongside the tax saved on finance costs.
A company can make pension contributions for a director. Whether those contributions are deductible for the company depends on whether they meet the wholly and exclusively test, which takes account of the director's role and total pay. That is a question for the accountant and a planner together.
Shares in a company that mainly holds investment property do not usually qualify for business relief from inheritance tax. A portfolio held in a company sits in the landlord's estate as shares, as it sat there as properties before.
Some landlords use company structures with different share classes to pass growth to children. Those arrangements need tax, legal and estate planning advice. You may arrange the lending that goes with them. The structure itself is outside your permissions.
From 6 April 2027, a landlord's unused pension funds also count towards their estate for inheritance tax. A landlord who planned to leave the pension untouched and live on rent may want that plan reviewed.
A landlord whose retirement plan is the portfolio holds that plan in one type of asset, financed with debt, in one country. Selling to fund retirement means capital gains tax and the timing of the property market. Passing the portfolio on means inheritance tax.
A planner can look at the portfolio alongside the landlord's pensions and other savings, and advise on how they fit together. Incorporation is a suitable point to start that conversation, because the landlord is already reviewing how the portfolio is held.
The point to raise it is when the landlord first asks about company lending. Set out the lending side, ask who advises them on tax, and make the offer once: "Moving the properties is a tax decision for your accountant, and the mortgages are mine. How the portfolio fits with your pension and your estate is a planning question I do not advise on. A planner at Equity & General can work on it with your accountant before you decide."
Take the landlord's consent to share the accountant's details with the planner, so the two can speak directly.
the mortgages, the lending timetable and the costs of refinancing.
incorporation, capital gains tax, stamp duty land tax and how the landlord takes money out.
the transfers, the company's articles and any shareholder agreement.
the landlord's pensions, investments and estate planning, working with the accountant.
Offer the introduction when the landlord first raises incorporation. The planner can then work with the accountant before the structure is decided.
No. Incorporation is a tax and structural decision for the landlord with their accountant or tax adviser. You advise on the mortgages that follow from their decision.
A company deducts finance costs from its profits, and pays corporation tax. Whether the landlord pays less tax overall depends on how they take money out and on the costs of moving. Their tax adviser can model it.
E&G advises on the landlord's pensions, investments and estate, working with their accountant. The way a landlord holds their portfolio can affect how they fund their retirement.
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