Buying a Property question

**Scruff** · 12 September 2015, 10:11

Hoo boy. What does your accountant recommend? NLUK alert! 💣

**seeourbee** · 12 September 2015, 11:56

I am my accountant. What does NLUK stand for ?

**mudskipper** · 12 September 2015, 12:00

Originally posted by seeourbee View Post

Hi,

So I have a large amount of cash sat in my limited company (I am a contractor). I would like to buy a small property and use this as the deposit. If I withdraw the lump sum as a dividend I will incur income tax at 32.5% on my person (net 22.5%). So can I then use the the company's cash to make the deposit directly, i.e. the company becomes part owner of the property ? That's not the activities of the company of course, so it is ok ?
Secondly, what about making a non-interest bearing Directors loan account for the same amount to my person. My person then uses this as a deposit for the property as normal.
Any advice welcomed ! Thanks

The short answer is no. Your best bet is to take the dividend, pay the tax and use it as the deposit. Doing it this year will stop you incurring the additional dividend tax to be introduced in April.

**mudskipper** · 12 September 2015, 12:02

Originally posted by seeourbee View Post

I am my accountant. What does NLUK stand for ?

NorthernladUK Comment generator

**stek** · 12 September 2015, 12:03

Buying a Property question

Originally posted by seeourbee View Post

I am my accountant. What does NLUK stand for ?

I'd get a proper one before you mess up.

**seeourbee** · 12 September 2015, 12:58

Thanks.

I'm a qualified accountant, so wont be messing up.

However I'm just exploring what's the most efficient way to do this. Directors loans do not sound the way forward. And it looks like there are more reliefs and allowances available to Individuals rather than companies, despite the company being cash rich.

**ChimpMaster** · 12 September 2015, 13:17

Originally posted by seeourbee View Post

Thanks.

I'm a qualified accountant, so wont be messing up.

However I'm just exploring what's the most efficient way to do this. Directors loans do not sound the way forward. And it looks like there are more reliefs and allowances available to Individuals rather than companies, despite the company being cash rich.

You can take a director's loan and pay 3% interest to your Ltd to avoid BIK. Buy the property in your personal name. Then repay the loan with rental income or an equity release (if you're adding value to the property. You can only release equity after 6 months ownership) or with dividends taken out (if planned carefully) at basic rate tax level this FY and next FY.

Note that director's loan has to be re-paid within a very strict timeframe, else you are liable to 25% tax on the loan amount.

See https://www.gov.uk/directors-loans/y...-company-money.

BTW I have done this.

EDIT: with Osbourne's tax rape on individual BTL owners, you might want to research buying the property entirely under the company name. This is more for future-proofing under a more efficient tax shelter, but depends on your long term plan with regards to property.

**northernladuk** · 12 September 2015, 17:02

IMO You are not going to get a lender that will give you a mortgage with a person and a company as part owners, particularly if you are the company as well. Their risk thresholds just won't be able to cope with this.

You also have to be careful with loans as some providers don't accept loans as deposit.

Speak to a Freelancer Financials. They are contractor mortgages specialists so will have had this question asked ad infinitum. I don't get any thing for them for recommending them but I have used them a couple of times so say NLUK sent you.

https://www.freelancerfinancials.uk.com/

**Scruff** · 12 September 2015, 18:34

If you're a qualified accountant, why are you asking a bunch of Gladiators & Radiator Bleeders on an internet forum?

Buying a Property question