Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property118. Read the original article for full details.
Property118 Calculator Compares BTL Company vs Personal Ownership
Property118 has introduced a Buy-to-Let Tax Comparison Calculator designed to help landlords assess whether owning rental properties through a limited company or personally is more tax efficient. The tool addresses a common question among landlords about potential tax savings from different ownership structures.
The calculator takes into account a range of factors beyond simply comparing Income Tax and Corporation Tax. Users can input details such as existing income, gross rent, mortgage interest, non-finance costs, ownership shares, associated companies, tax resident status, and company profit extraction preferences. The tool also considers salary optimisation, including the impact of the Personal Allowance taper for incomes above £100,000.
The calculator provides a comparison of personal ownership and company ownership, both before and after salary optimisation. It generates results for Income Tax, Corporation Tax, employer and employee National Insurance, Section 24 finance cost relief, company retained profit, and a ten-year straight-line comparison.
However, Property118 notes that the calculator is intended as a screening tool and not a formal tax calculation or recommendation. It does not cover all possible tax issues, such as Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT), Annual Tax on Enveloped Dwellings (ATED), Employment Allowance, Scottish income tax, pension contributions, student loans, Gift Aid, Marriage Allowance, losses brought forward, or detailed anti-avoidance considerations. The calculator also assumes that any salary paid by a company is commercially justifiable and reflects real work carried out.
Property118 advises that the calculator should be used as a starting point for discussions about ownership structure. Tax is only one aspect of the decision, and other commercial objectives such as succession planning, refinancing flexibility, liability management, business continuity, retirement planning, and future portfolio growth should also be considered.
Source: Property118