how do I reduce my tax liability on buy to let income as a 40% tax payer?

[len]

I have a number of buy to let properties and I am also a 40% tax payer. Would it be a good idea to form a company to manage my property interests? By doing so would I (the company) pay tax on net rental income at 20% instead of 40%?

Also, by operating through a company, would it provide me with some financial protection against being sued for personal injury damages if someone were to fall down the stairs or suffer some kind of personal injury on my premises.

[taxman]

Hi Ien,
There are many issues to consider when deciding whether to incorporate your business. Restricting my answer to your query it is correct that corporation tax at 20% would probably be paid on net rental income as opposed to a 40% tax rate if the properties were held by you personally.
However the company is a seperate legal entity, and the corporation tax is a tax for the company. To extract the remaining cash you would also incur a tax charge which will vary depending on the method of payment (likely to be either salary/bonus or dividend).
Also on a disposal of one of the properties in the future corporation tax would be paid on the gain in the company, and again on extraction of the cash to you.

As a company has a seperate legal entity, then it can sue and be sued in its own name, therefore under normal circumstances your personal assets are given more protection.
If you would like to consider this possibility in further detail, please e-mail me your telephone number and i will give you a call. The above simply touches the surface on the issues to consider.
Regards