Updating post from Reddit.
Hi all,
Looking to purchase my first property through a Ltd company, will also be the first ever property I purchase in my name.
The numbers all worked out and had an offer accepted before learning about a massive 8% charge on the property value, which is brutal.
It's adding nearly £45k to the purchase price and the numbers look a lot less attractive now.
How have you guys deals with ADS before? Is there any way to avoid it?
Thanks in aavance.
ADS will apply despite you not owning a property because you're buying it through a company.
Here's the example:
Orange Limited currently operate out of rented premises. The company decides to purchase a dwelling to generate buy-to-let income jointly with Blue. Blue does not own any properties. At the end of the effective date, the company owns only one dwelling. However, as long as the relevant consideration for the transaction is £40,000 or more, each purchase of a dwelling that a company makes is subject to the ADS. Therefore, the ADS will apply. Despite not already owning a property, Blue would be jointly responsible for paying the ADS as they are jointly buying property with a company, for which the ADS will always apply.
If you buy it in your personal name and you don't own any other property then it won't apply.
Ok thanks, that’s a shame.
Obviously purchasing in my personal name is out of the question because the income would be taxed at 40% given I’m already in the higher rate tax paying bracket because of my job.
Appreciate the help.
So you tried to avoid tax and it didn’t pay off.
Hardly tax avoidance it’s more tax planning.
And it is going to pay off because paying 19% in the long run is better than paying 40% but saving this £45k.
Thanks for your contribution though.
Tax planning is literally the PR-sanitised word for tax avoidance.
Just as insightful as arguing for ‘expatriate’ so you don’t have admit you’re an immigrant.
Tax avoidance is illegal, this isn’t.
Go and cry in the corner by yourself about it.
Tax avoidance is not illegal.
Tax evasion is illegal.
Very aggressive tax avoidance may not work, in that if HMRC thinks you did something just to avoid tax, rather than doing something in a way that was advantageous for tax purposes, they can charge you the tax anyway, but neither side would want to call that evasion.
Tax evasion is illegal.
Tax avoidance isn’t. It usually has to be declared though. And can however be retrospectively claimed back by HMRC at any time.
So an ISA is tax avoidance? Pension tax relief?
Fool
Doofus . Tax rules and allowances are in place and legal . Eg If someone wanted to sell some shares , and had a £22k gain. It would make sense to sell over two tax years and use the personal cgt allowance rather than pay tax on the gain over the annual cgt allowance. This isn’t tax avoidance.. it’s using the allowances in a smart way. Your whole mentality smacks of someone who has zero entrepreneurial intelligence.
only retards pay more tax than they need to.
It’s a brutal tax. Was 3% when I bought rental properties and I thought that was harsh ! Won’t be buying any more but that was their plan all along.
Yeah, makes life very very difficult.
This is also an Airbnb which in itself is rite with issues and government guidelines making it more expensive than a traditional BTL.
Is ADS only in Scotland?
Yes it’s set by the Scottish Government. Was introduced by the Greens when they were in coalition with the SNP.
Exemption for ADS does apply where 6 or more properties are involved in a single transaction. Scot gov website:
> When six or more separate dwellings (involving the transfer or purchase of a major interest) are the subject of a single transaction they are treated as non-residential property.
But this won't apply to you in this case. The game is rigged against amateur landlords in favour of institutional investment. You just have to bite the bullet or pull out.
Incredible hahahaha.
What am I thinking not having millions in the bank, eh. Quite embarrassing for me.
I know... This is good news for higher earners with liquidity and looking to diversify investments. This has been the trend for some time now unfortunately.
Edit: I suppose this is also good for those with a portfolio of 6 or more properties and are looking to sell. I heard it's a pretty common exit strategy since the buyer will likely make a more attractive offer to purchase all 6 to save tax.
No. And you really should have known about it before making an offer. And your property lawyer should have made you aware before you made an offer. Either pay it or pull out of the deal.
Stop being a tax dodger and pay your fair share, leech.
Mao was right.
It’s called doing business, costs like that make it difficult to make a return.
If you don’t understand that then you’re in the wrong place, moron.
Good.
Any act that makes you lose money is good.
May the Labour government put a 200% tax on rents next.
I work a blue collar job like you, have saved up enough to invest in one single property.
Meanwhile, if I were to buy 6 properties at once like the actual rich people can & do, I’d curtail the cost entirely.
But yeah, I’m the bad guy who should get a 200% tax on rents.
What a sad little life you live my friend.
This is a community for Landlords. You can be anti-landlord in other places like /r/HousingUK/