Letting to your LTD company and sub-letting to tenants

by **qaz843** on Fri Nov 18, 2011 11:24 pm

Hi,

Someone floated the idea to me of letting a property to a ltd company (which I presumably would be director of) and then the ltd company sub lets the property onto the tenants. Of course, the idea behind this is that the rent will be taxed at corporation tax of 28% as opposed to income tax.

However, do directors not get taxed when taking a dividend from the company? Does anyone have experience or knowledge of such a structure?

Would there be VAT implications? Are there any further implications of such a structure.

Thanks.

by **pawncob** on Sat Nov 19, 2011 9:51 pm

Just think it through. Does the LTD pay you any rent?

by **qaz843** on Tue Nov 29, 2011 3:58 pm

That was my thoughts hence why I was a bit sceptical.

However it apparently came from what I would think to be a semi-reliable source (a guide from one of the major landlord associations).

Maybe I am misinterpreting what has been said? Here is the text, word-for-word.

"In certain circumstances it may be worthwhile for a limited company to be brought into the structure. It is normally sensible for the properties themselves to be held in individual or joint names, but these can be sub-let to a company who then let out the properties to the ultimate tenants. In this way, the let income from the property is taxed at the lower rate of Corporation Tax, thus leaving more for the ultimate owners".

by **section 44** on Tue Nov 29, 2011 4:07 pm

It's too brief to be useful.

Would the company pay the individuals a rack rent? If not, would there be a (deemed) premium on the grant of the lease to the company?

How would the rental profits be extracted from the company and what would be the tax consequences of that profit extraction?

Would the company incur a stamp duty land tax charge?

etc