directors loan account

[yearplanner]

hi
can u do this?

if u start up a new ltd company,100% shareholder,
put 300k of own money into this new company.
then buy shop which is let at £25000 per annum on a 15 year lease.
can i take out £20000 per annum free of tax,
assuming this amount will be taken off the directors loan account (300k)

[cranleys]

This is fine.

Colin Davison
Tax Planner
colin@cranleys.co.uk

[Bryn]

Hi

Colin has answered you.

My question is why would you want to do what you propose? Depending upon the circumstances you will expose your company to corporation tax as an investment company and capital gain (taxed as corporation tax) on eventual sale.

Bryn Walker
Director
Silver Planet Advanced Tax Solutions Ltd

bryn@silver-planet.com

[yearplanner]

hi bryan
the reasons why are these:
1.hope to keep shop for considerable time.
2.want to tie up money in commercial property.
3.give me income for life

i now understand that corp tax due on £25000 rent
at 19% with some allowances.
if i took out say £18000 allow £7000 for corp tax and admin = £25000

now then if 300k in bank earing say approx 4%
this gives me less money

in 15 years shop collects more rent and worth more than £300k

if you can see any floors in my plan please please advise

regards

pat

[Bryn]

Hi Pat

Its Bryn mate, not Bryan. Welsh parents.

Only flaw is that I am assuming the shop is let to a third party?

As such your new company is an investment company so will pay corp tax at 30% ie £7500 per year.

There are other ways to achieve what you want, with lower tax burden's, depending on your circumstances. My email address is above if you prefer.

Bryn

ps. Nice yield!

[paul.e]

Hi Bryn
our ltd company owns and rents commercial property. The revenue treat us as having a schedule A business and are taxed under case 1 of shedule D. ie tax at 19% then marginal relief to 30%. Would not "yearplanner" be taxed in the same way and not as an investment company

Paul.e