Best way to structure investment property

[170872]

Dear all,

I have questions and need advice.

If a person is in a 40% higher rate tax bracket and owns few properties. And now plans to acquire more property. What is the best structure he can use so that he does not pay 40% tax on additional property income that he gets.

If he puts the newly acquired property in a Ltd company, with say three shareholders, then the company pays Ctax at 20%, but how can he extract income from these properties? If he takes dividend then these dividend will be assessed at higher rate of 32.5% in his personal tax as he is in the 40% tax bracket.

Can he waive his rights to dividend? and let the other shareholders to take more? Is this the best way? or Is there a better tax efficient structure?

Also one more question- will the company require to register for VAT if the rental income reaches above the VAT registration threshold? My understanding is that residential rental are outside the scope of VAT. Only if he has commercial property and the total income is above the VAT threshold he then need to register for VAT. Is this correct.

Thanks

[section 44]

these dividend will be assessed at higher rate of 32.5% in his personal tax as he is in the 40% tax bracket.

Effective rate of 25% (given the one-ninth credit)

Can he waive his rights to dividend? and let the other shareholders to take more?

the settlements legislation might be a problem

Also one more question- will the company require to register for VAT if the rental income reaches above the VAT registration threshold? My understanding is that residential rental are outside the scope of VAT. Only if he has commercial property and the total income is above the VAT threshold he then need to register for VAT. Is this correct.

Yes

[King_Maker]

A property investment company is usually only worthwhile , if the owner(s) do not need to extract the profit in the short term.