watched a few your videos,really helpful, but I still feel confusing, No1: If director injected 200K for company and bought 1 property which was under company name, Company received rental 20K/year, can company use the 20k rental income repay director loan ( 5000 interest and 15K capital repayment)? meant the company will not make money, but company arsset will add one property worth 200K, liability is 185k, profit 0, is it right ? No2 : or company rental 20K- 5000 interest=15000; 15000 pay corporation tax 19% first then repay director loan? I think the company make profit should pay liabilities first, i don't know which way is correct. Thanks
Your question is about the taxation treatment of a directors loan. You need to ask a qualified accountant to answer this, not me. My experitse is property finance, not taxation.
Hi, I was also wondering whether for the Directors loan, is this a single agreement for all the loans or do you create a new Directors loan for every single loan separately for when funding the company the deposit amount. Thanks.
This is a question that you should refer to your accountant, they will advise you on the correct and most tax effective to set up directors loans. Individual circumstances my affect the way to do this, your accountant will know your specific situation.
Hi Kevin, great video I’m a higher rate tax payer and my primary interest is cashflow from BTL through an SPV. But I’d also like to fund further purchases. With this in mind how much pre tax profit would you advise showing as a minimum? Appreciate there are a few variables e.g. LTV etc but just as a rule or thumb or might lenders look past this if the lender can provide personal guarantees? Cheers James
I appreciate your comment James. Different lenders look at it different ways. A few may focus on the pre-tax profits of the SPV but others may look at your personal income overall. Once that hits £25k anything above that has minimal effect or advantage - as a HRT, you are already there
Good video with a valuable tip there Kevin. I registered a company with 3 SIC codes. Can I buy multiple properties within this and do lettings and trading as well within the same company?
Glad you liked it Rocket Man. As long as you have the SIC codes that apply to both letting and trading then the technical answer would seem to be yes. I would check it out with your accountant though to see if rolling it all into 1 Ltd Co is the most tax efficient way to do it
Kevin Wright, thanks for the reply. I have so far bought a few in our name but thinking about buying through a company in the future. How difficult/expensive is it to put them into separate companies. I know there’s a few discussions about this topic, some say put each property in a single spv and all that
As I said in my last reply, for anything to do with tax and Ltd Co's, your questions should be directed to someone qualified to answer them, an accountant@@rocketman246
Not necessarily. You have a choice when you repay your directors loan, it can be before or after you make profits. Take your accountants advice on the most appropriate time to repay your directors loan.
Hi I don’t get it . You can’t pay directors loan without profit being made? Also so imagine you have 30k deposit . Removing this yearly like 5k per year would be ok ?
Clearly there has to be a trading profit for a directors loan to begin to be repaid, but repaying it reduces or eliminates that trading profit. it looks like your are confusing there being no net profit after the repayment of directors loans with no trading profit. if you made a directors loan of £30k to your company and it was repaid at £5k per year over 6 years, that would be ok as long as the trading profit your company made was in excess of that £5k to the point where that £5k didn't represent the majority of the trading profit.
@@johnstewart1814 you are better to direct that question to an accountant John, my expertise is finance, not tax. The video warns that extracting directors loans too quickly makes getting mortgages harder.
@@johnstewart1814 directors loans repaid out of your trading profits reduces the Corporation Tax payable is my understanding but, as I said, I am not an accountant - check it out with one first.
Thank you Kevin!
welcome
Great considerations here, thank you! Is the mortgage company considering profits at time of application or as filed with HMRC?
Mortgage lenders invariably take the historic accounts of the company filed with HMRC as income when applying for a mortgage
watched a few your videos,really helpful, but I still feel confusing,
No1: If director injected 200K for company and bought 1 property which was under company name,
Company received rental 20K/year, can company use the 20k rental income repay director loan ( 5000 interest and 15K capital repayment)? meant the company will not make money, but company arsset will add one property worth 200K, liability is 185k, profit 0, is it right ?
No2 : or company rental 20K- 5000 interest=15000; 15000 pay corporation tax 19% first then repay director loan?
I think the company make profit should pay liabilities first, i don't know which way is correct.
Thanks
Your question is about the taxation treatment of a directors loan. You need to ask a qualified accountant to answer this, not me. My experitse is property finance, not taxation.
Hi, I was also wondering whether for the Directors loan, is this a single agreement for all the loans or do you create a new Directors loan for every single loan separately for when funding the company the deposit amount. Thanks.
This is a question that you should refer to your accountant, they will advise you on the correct and most tax effective to set up directors loans. Individual circumstances my affect the way to do this, your accountant will know your specific situation.
@@KevinWrightProperty thanks a lot
@@sahab999 welcome
@@sahab999 - welcome
Hi Kevin, great video I’m a higher rate tax payer and my primary interest is cashflow from BTL through an SPV. But I’d also like to fund further purchases. With this in mind how much pre tax profit would you advise showing as a minimum? Appreciate there are a few variables e.g. LTV etc but just as a rule or thumb or might lenders look past this if the lender can provide personal guarantees? Cheers James
I appreciate your comment James. Different lenders look at it different ways. A few may focus on the pre-tax profits of the SPV but others may look at your personal income overall. Once that hits £25k anything above that has minimal effect or advantage - as a HRT, you are already there
Good video with a valuable tip there Kevin. I registered a company with 3 SIC codes. Can I buy multiple properties within this and do lettings and trading as well within the same company?
Glad you liked it Rocket Man. As long as you have the SIC codes that apply to both letting and trading then the technical answer would seem to be yes. I would check it out with your accountant though to see if rolling it all into 1 Ltd Co is the most tax efficient way to do it
Kevin Wright, thanks for the reply. I have so far bought a few in our name but thinking about buying through a company in the future. How difficult/expensive is it to put them into separate companies. I know there’s a few discussions about this topic, some say put each property in a single spv and all that
As I said in my last reply, for anything to do with tax and Ltd Co's, your questions should be directed to someone qualified to answer them, an accountant@@rocketman246
Do you mean you don’t show a profit until the interest on the loan is repaid?
Not necessarily. You have a choice when you repay your directors loan, it can be before or after you make profits. Take your accountants advice on the most appropriate time to repay your directors loan.
Hi I don’t get it . You can’t pay directors loan without profit being made? Also so imagine you have 30k deposit . Removing this yearly like 5k per year would be ok ?
Clearly there has to be a trading profit for a directors loan to begin to be repaid, but repaying it reduces or eliminates that trading profit. it looks like your are confusing there being no net profit after the repayment of directors loans with no trading profit.
if you made a directors loan of £30k to your company and it was repaid at £5k per year over 6 years, that would be ok as long as the trading profit your company made was in excess of that £5k to the point where that £5k didn't represent the majority of the trading profit.
@@KevinWrightProperty ahh ok, so I’m assuming directors loan can only be paid after corporationian tax is paid correct ?
@@johnstewart1814 you are better to direct that question to an accountant John, my expertise is finance, not tax. The video warns that extracting directors loans too quickly makes getting mortgages harder.
@@KevinWrightProperty but you mentioned before profit which I doubt
@@johnstewart1814 directors loans repaid out of your trading profits reduces the Corporation Tax payable is my understanding but, as I said, I am not an accountant - check it out with one first.