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BTL business. Starting capital.

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    #21
    Originally posted by Lance View Post
    If you put £100k capital into the company rather than loan it... when you finally sell up for say £150k, you only have £50k of capital gain.
    Part of the chain missing here I think.

    I put 100k in the LTD as capital (via shares, right) then the LTD will buy a property for 100k. When LTD sell up for 150k, LTD wil have to pay corp tax of 19% on the 50k profit. What CGT here?

    Then the LTD will have ~140k as fund. If I want to take this 140k out, wont I need to pay at least 7.5% divi tax on the whole amount of 140k?

    In contrast: If I lend the 100k, when LTD has 140k, it can pay me back 100k and I pay at least 7.5k in divi tax on 40k.

    Am I missing something?
    Last edited by anim; 20 September 2020, 13:15.

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      #22
      Originally posted by Lance809815
      nothing illegal about it. GAAR is not about legality.
      It's about using complicated (aggressive) setups solely for the purpose of tax avoidance.
      Good remark. I read up on GAAR. The way it formulated, 95% of us here would fall foul on it if it wasn't for the arctic case. Spouses' salaries, divis etc.

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        #23
        Originally posted by Iliketax View Post
        I think it may be more complicated than that.

        There would be CGT on you if you gifted the property to your company (subject to your annual exemption) and there would also be SDLT (even if the company paid nothing). I omitted CGT because it would be below CGT allowance. SDLT is paid on the consideration, so a gift should not attract SDLT.


        The company would also get a deemed market value base cost on the gift (so not the CT that you suggest). If you don't own the whole company, you have to think about IHT too as a gift would (depending on the amounts and your circumstances) create an immediate IHT charge.
        I dont know about this. Need to check.
        see above.

        Comment


          #24
          Originally posted by anim View Post
          Part of the chain missing here I think.

          I put 100k in the LTD as capital (via shares, right) then the LTD will buy a property for 100k. When LTD sell up for 150k, LTD wil have to pay corp tax of 19% on the 50k profit. What CGT here?

          Then the LTD will have ~140k as fund. If I want to take this 140k out, wont I need to pay at least 7.5% divi tax on the whole amount of 140k?

          In contrast: If I lend the 100k, when LTD has 140k, it can pay me back 100k and I pay at least 7.5k in divi tax on 40k.

          Am I missing something?
          What I have done is lend the company money via director loan - I do not understand the alternative which I think means increase the share capital of the company. I dont see what that gives you

          Comment


            #25
            Originally posted by LondonPM1 View Post
            What I have done is lend the company money via director loan - I do not understand the alternative which I think means increase the share capital of the company. I dont see what that gives you
            That's hardly surprising.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

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              #26
              Originally posted by Lance View Post
              nothing illegal about it. GAAR is not about legality.
              It's about using complicated (aggressive) setups solely for the purpose of tax avoidance.
              I came out with this approach whilst sitting on the toilet, it's not complicated at all. It's no more complicated than taking 800 salary and rest dividend from your LTD. Need to ask accountant , didn't approach him yet on this

              edit: read a bit on it and it seems subletting might not be OK , but renting via airbnb would be in the green because you want to have "business image"

              General Anti-Abuse Rule (GAAR) – what it is and why it’s important to property investors - Fylde Tax Accountants
              Last edited by GitMaster69; 20 September 2020, 13:51.

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                #27
                Originally posted by anim View Post
                SDLT is paid on the consideration, so a gift should not attract SDLT.
                No, that is not the case with a gift of property to your company.

                Comment


                  #28
                  Originally posted by Iliketax View Post
                  No, that is not the case with a gift of property to your company.
                  Do you agree that cgt is??

                  If yes are you suggesting transferring a 500k property for £1. If yes you will have 500k in profits which corp tax is payable on

                  For me the cgt made it a non starter

                  Comment


                    #29
                    Originally posted by LondonPM1 View Post
                    Do you agree that cgt is??

                    If yes are you suggesting transferring a 500k property for £1. If yes you will have 500k in profits which corp tax is payable on

                    For me the cgt made it a non starter
                    Once again you seem to not be reading all the posts - just the ones that match your incorrect assumptions...
                    merely at clientco for the entertainment

                    Comment


                      #30
                      FOLPM1

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