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Where Taxpayers and Advisers Meet

Property Development Business Structure

Zebedee68
Posts: 3
Joined: Fri Aug 02, 2019 6:37 pm

Property Development Business Structure

Postby Zebedee68 » Fri Aug 02, 2019 6:48 pm

Hi,
In a position to start as a property developer, wondering what the best structure would be.

Intending to purchase rundown properties for cash, renovate whilst living in, and then sell.

Hopefully will be doing 2 a year, with a clear profit of 30-50k on each one, ie upto 100k a year.

Should I do it as self employed, or as a ltd company (paying myself minimum via PAYE)

There will only be myself, no employees, and for the foreseeable future any profits I make will be used to buy the next property.

Also, do I need to VAT register? (all work will be under normal VAT - ie no new builds etc) but presumably my turnover would be greater than the VAT threshold?

AdamS93
Posts: 238
Joined: Tue Sep 26, 2017 6:28 pm

Re: Property Development Business Structure

Postby AdamS93 » Sat Aug 03, 2019 8:17 am

The best advice one can give would be to get an accountant on board. There are plenty of traps that you could fall foul of, especially dealing with property.

Most in your position would go down the ltd route, but everyone's situation is very different!

On the basis of the facts provided, you are only going to be making exempt supplies for VAT so therefore cannot register for VAT even if you wanted too.

Zebedee68
Posts: 3
Joined: Fri Aug 02, 2019 6:37 pm

Re: Property Development Business Structure

Postby Zebedee68 » Sat Aug 03, 2019 1:31 pm

Thanks Adam.

Yeah, makes sense.

My primary concern is if I buy a dog, and it costs me more than expected - with the number I'm planning to do, there may well be a good chance of making a loss on the odd one.

I don't want to have to pay tax on a profitable project, and then have a loss - I'm thinking that with a ltd company I can offset that? (presumably only if they both sell within a 12 month period?)

bd6759
Posts: 3107
Joined: Sat Feb 01, 2014 3:26 pm

Re: Property Development Business Structure

Postby bd6759 » Sat Aug 03, 2019 9:44 pm

In both cases losses can be carried forwards and set against profits of the same trade.

Jerome_Lane
Posts: 16
Joined: Mon Jul 22, 2019 10:13 am
Location: Camberley, Surrey
Contact:

Re: Property Development Business Structure

Postby Jerome_Lane » Mon Aug 05, 2019 9:31 am

Hi, care is needed for a limited company structure if you are living in a property owned by the company. Benefit in kind charges are likely to apply. You might be better off considering hybrid arrangements and getting tax advice. Contact me if you'd like to discuss further. Good luck!
Jerome Lane
Tax Advisor
jerome.lane@stewartco.co.uk
Stewart&Co.
Chartered Accountants
Telephone: 01276 61203

Zebedee68
Posts: 3
Joined: Fri Aug 02, 2019 6:37 pm

Re: Property Development Business Structure

Postby Zebedee68 » Mon Aug 05, 2019 1:28 pm

In both cases losses can be carried forwards and set against profits of the same trade.
Of course they can - thanks bd - a bit of brain fade, so much to consider.
Hi, care is needed for a limited company structure if you are living in a property owned by the company. Benefit in kind charges are likely to apply. You might be better off considering hybrid arrangements and getting tax advice. Contact me if you'd like to discuss further. Good luck!
Hybrid arrangements, Jerome?

I think the potential tax savings by going ltd will make up for the extra admin involved - presumably I can set a nominal rent (as it's a building site, uninhabitable), and offset the council tax, bills etc. against a salary sacrifice? That would only cost me a bit extra in NI contributions..


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