Bro, I just want you to know I really appreciate your videos. First TH-camr I've seen actually going into the details, and being UK focused. Thank you for your work. Wishing you the best success.
The additional tax rate bracket is now £125k and not £150k. Also your personal allowance reduces by £1 for every £2 above £100k. If you’re a higher earner, it makes sense to put the property into a Ltd company.
Interesting angle! I guess also worth mentioning that interest rates are a bit lower in the personal name and you can get money out of a ltd in form of a directors loan but general rule of thumb applies if you stay 20% go personal if you are 40% go ltd?
I haven’t even finished the video yet and it’s already the best I’ve watched on this topic. Thanks for being so generous with your knowledge and breaking it down in the way that you do
Fantastic video and recently subscribed. Me and my wife have gone with a limited. She's an accountant. And we can get tax breaks on a room being an office in the house and also meals and fuel on visits to viewings.
I found it interesting to learn about the potential downsides of buying property in a limited company. It's important to consider all factors and potential risks before making any big financial decisions. Thanks for sharing this informative video!
New to the channel, like what you are doing. Just a note that its better to have a LTD company in terms of inheritance tax. Otherwise you'd get slapped with 40% tax.
One of the other things you need to take into account is Directors Loans, how you can loan the company the money and pay it back once you've received enough rental, With no tax implications as all the investments into the property you can class as a directors loan.
@@ThatAhmedKhan let’s say it’s a £40,000 property and it brings in £400 a month That’s going to take a while to recoup that loan that you put in but I completely get it’s for calculator purposes None the less great video 👌
Great video! I heard recently some advice regarding buying SA properties in own name due to tax benefits. Since I have just got my mind around buying in a company, I am not that comfortable buying in my personal name. What is your view regarding buying BTL and SA properties in the same company?
In the example of taking equity out of the property, you had a £75K loan against a £100k property, after 10 years the property is worth £200k so you remortage at 75% LTV and get £150k of which £75k goes back to the original lender to settle that mortgage and £75k can be taken tax free - which is great. However, you're surely then servicing a mortgage that is double what it was and then likely putting yourself in a corner in terms of profitability/tax liability, with the initial example of HMRC seeing your profit as exclusive of any mortgage deduction other than that 20% relief? Maybe I've missed something here - hope I have to be honest?
Ahmed, thank you for putting out this video. I've been searching for a clear breakdown on this subject and you summarised all the points I was looking for perfectly! You've earned another sub
Could you not just take the money out of the ltd company as dividends at 8.75% tax as a basic rate tax payer? Making this comfortably the best option for paying the least tax?
A divided has to be paid from profits. Therefore you’d have to first pay 19% corporation tax and then the 8.75% dividend tax, which would end up being more than the 20% income tax.
ahmed i watch a lot of property videos and your simple non rambling explanations are spot on. Just dont forget LTD also is better for things like deaths etc , short term pain long term gain
if I am an international property buyer and will be buying properties with full cash payments (no mortgages of any kind involved), should I buy them in my name or LLC you think? I am considering to buy multiple ones for rental purposes so they can supplement my annual expenses while living in the UK...thanks for the help.
Great informative video. I was wondering how the comparison would be if instead of paying a salary to the limited company owner (reducing profit to zero) instead they were paid through dividends?
Such an informative video Ahmed. I have 3 BTL in my personal name. I didn’t know that when pulling money out by remortgaging that you pay tax on it in a limited company. 🤯 I have just subscribed!
Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $260K for sometime now, my major challenge is not knowing the best entry and exit strategies... I would greatly appreciate any suggestions.
I agree , I assumed I had a hang of the market at first, I gained $50k one year and I was super elated, not until I stumbled upon a portfolio-adviser whose been guiding me since the market's been sham after the pandemic, to my utmost surprise I netted a whooping $280K during this dip, that made it clear there's more to the market that we avg joes don't know
Jenny Pamogas Canaya is actuaIIy the one that guides me, she’s a hlghIy-sought out advlser, so I’m not certain she’s acceptlng new intakes, but you can give it a shot. It wouldn’t be proper to just Ieave her number Iying around, but she has a webpage you can look at if you googIe her name
Hi Ahmed, do you mean even other than your principal residence BTL bought in your own name and when you sell in the future you do not have to pay tax for capital gain?
But when you factor in 33.75% dividend tax for higher earners.. even in a Ltd company, you’re still paying over 50% tax… My question is how can anyone make any money under these circumstances ?
Thank you for an easy to follow guide. Your calculator webpage isnt secure though, so wont open in my browser, which is a shame. But a great video never the less.
Great content Ahmed. I just came across your video last week when I was looking for SA related content and I must say, I learnt more on your video than I learnt from the paid course I attended. I am about to take up a property for SA by next week in Peterborough and I have signed up for your mentorship programme but I'm yet to get a response. Great job bro
I have in the last 12 months purchased 4 properties in my own name to add to the 4 I already owned. This was a decision I made to carefully just about stay within the 20% tax bracket (I have no other job income) many video I have watched have suggested that I made the wrong decision but after watching your video I am more confident that unless I buy anymore only then will I need a LTD company structure as I would be in the higher tax bracket. I also personally think that the government will change the rules again once there is enough people suck more money out of in LTD company structures. Thank you so much for this great video Ahmed😊
My thoughts too. I lose about £500 a year on my BTL in my personal name, but can't help think that the government will absolutely go after LTD company property wrappers next.
You made the correct decision in my opinion. If you have no income you're far better buying in your own name and using that as your income in the 20% tax bracket rather than all the hassle of tying up in a LTD company for probably no financial gain.
Great video Really appreciate it Is there any chance of getting an advice from you. I would like to know if I want to move a BTL property from personal name to LTD company: What would be the cost?
You should open courses for people my brother.I will definitely be first in line. Just made a confident decision on a house after watched your video Keep it up brother .appreciate it
Thanks Ahmed. What if you have properties in joint accounts.... Then you can go upto 4 properties in joint names!!!! One of my friend had done this. And from 5th property they are buying in ltd company. Hope this helps too
You’d have to pay corporation tax which is 19%. Or u can reinvest that money into another property/assets/business expense and keep ur profits low and pay less tax
I know what you are trying to convey... and some info is useful, but no use of dividends (albeit the tax advantage has lessened over the past few ears) has been mentioned. There are advantages with IHT in a Ltd Company... also the use of Alphabet shares. This is over simplified as it also depends on what you are going to do with your property and personal capital gains could be an issue. Off the shelf Companies are not fit for everyone. Also, just for clarity, you say these examples are for UK.... unfortunately you should state England and Wales. Scotland has different tax thresholds.... we pay more tax.
A limited company can't deduct mortgage payments from rental income only interest is deductible. Also, the 20% relief only relates to interest, not the total mortgage payment.
This video and calculator is for BTL properties and pretty much all BTL properties are on interest only mortgages so the calculator should hold but yes fair points
I wonder what will calculation look like if you are already in 40% bracket and the interest rates are high as they currently are, then llc makes sense from property 1 I guess
Don't forget if you pay yourself a salary from a ltd company, you need to pay employee and employer National insurance contributions too. Or you can pay corporation tax and a dividend, but only on profit, not if you actually lost money
@@ThatAhmedKhan or... you can charge interest on your directors loan, then you don't pay corporation tax or national insurance. You pay income tax, but there's a separate £1000/£500 tax allowance for it depending on which tax band you're in.
...depending on level of director's loan on the account. I would suggest also a cheaper rate at dividends tax rate instead of income tax. But this video goes into great depth! New subscribers gained!
there is a bit in this video where you say that when one refinances a property owned in a LTD company and draws down on the surplus loan - then one is liable to pay tax on it.......as the loan is effectively treated as profit.........how sure are you about this?
@@ThatAhmedKhan the funds (albeit loans) belong to the LTD company which is why one is taxed if the director / SH extracts them as div or salary- however there are ways around it if planned ahead….
In limited company you get more control and can decide when and if you want to take money out. When purchased a property under your name, you have not control.
My God - you are such a genius - How does your mind work - Truly a Genius. What is your IQ MAN!? I am sure there is no calculator for that one! Your IQ must be a very large number and I bet you - you are a chess player can solve the Rubbicks Cube and you find Sudokus easy to solve. Wait a minute you are not a professor - Are you? Well you should be. Thanks for all this flawless education.
You pay less personal tax on dividends but you would need to have paid corporation tax on the profit before they are withdrawn. If you add a spouse as a shareholder who doesn't work you can give them a dividend of £12570 and they pay no tax so it can work out quite tax efficient. Or even if they are a 20% taxpayer and you are a 40% taxpayer.
Hey great video, one thing are you 100% sure that's how the 20% tax relief works on property held in your own name? My understanding was the 20% gets taken off the mortgage amount before tax. So on a 5k mortgage you would get 20% relief so you would pay tax on 4k. Not pay on 5k then claim 20% of the mortgage back. This would mean only £200 of your tax bill not £1000 meaning a ltd would still be more beneficial in your first example.
@@ThatAhmedKhan Hi, it isn't quite correct. The 20% tax relief is only on the mortgage interest, not the repayment aswell. Also, taking money out of the business rather than taking it as a salary at 20%, you would want to take it as a dividend which will be 8.75% at the time of this message. Other than that, great video man. Keep it up
@@JordaanW yes you’re correct about the mortgage interest. In the video I was talking about buy to let mortgages, which are 99% of the time interest only, so I didn’t quite clarify that and just assumed that everyone knew that but maybe should’ve pointed it out. I’ve also changed the online calculator so it now is based on dividend :)
Can the govt call your expense I.e Mortgage interest as profit, when it's clearly an expense. Can they not be legally challenged on this? Or is it a case they can do what they want?
However there is the fact you can withdraw money in the form of a directors loan if the investment was loaned to the company from your personal account. This will be more tax beneficial than the calculations you have shown. However, still a great video and great information
Yes but you can only do that until the loan is paid back in so I did not want to include that in the calculations as that is not viable in the long-term
Great to see someone talking about the UK market! Do you know if it's a difficult process to move the property from personal name to a limited company once you pass the income threshold? Also, how about capital gains tax? Is this more costly in personal name or limited company? Many thanks 😊
Most people think of investing in more than one property. If the 1st is in individual name, can it be transferred to Ltd company while buying 2nd? How does it work?
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Bro, I just want you to know I really appreciate your videos. First TH-camr I've seen actually going into the details, and being UK focused. Thank you for your work. Wishing you the best success.
Glad I could help! Appreciate you here, too!
Agreed, and well said!
Agreed, great video!
I love that the video jumps straight into numbers and examples. No long introduction or unnecessary filler. Perfect!
As a visual learner its amazing to see the calculations on paper ❤ can't thank you enough. Keep up being awesome
Happy to help!
The additional tax rate bracket is now £125k and not £150k. Also your personal allowance reduces by £1 for every £2 above £100k.
If you’re a higher earner, it makes sense to put the property into a Ltd company.
100%
Not necessarily.
It depends if you have any loan interest and also if you need to take the money out.
Interesting angle! I guess also worth mentioning that interest rates are a bit lower in the personal name and you can get money out of a ltd in form of a directors loan but general rule of thumb applies if you stay 20% go personal if you are 40% go ltd?
I haven’t even finished the video yet and it’s already the best I’ve watched on this topic. Thanks for being so generous with your knowledge and breaking it down in the way that you do
Fantastic video and recently subscribed. Me and my wife have gone with a limited. She's an accountant. And we can get tax breaks on a room being an office in the house and also meals and fuel on visits to viewings.
I found it interesting to learn about the potential downsides of buying property in a limited company. It's important to consider all factors and potential risks before making any big financial decisions. Thanks for sharing this informative video!
Well said!
Also, in limited company the solicitor fees and interest rates is higher so that must also be taken into account.
Depends if the limited company which owns the property is in the Cayman Islands though 🤷♂️
New to the channel, like what you are doing. Just a note that its better to have a LTD company in terms of inheritance tax. Otherwise you'd get slapped with 40% tax.
That is a benefit. I’ve mentioned this in the calculator
Well articulated and straight to the points, an aspect of property investment i was looking to understand as a beginner - Nice one👏
Great video, you havnt mentioned ditectors loan which is presumably the deposit.
One of the other things you need to take into account is Directors Loans, how you can loan the company the money and pay it back once you've received enough rental, With no tax implications as all the investments into the property you can class as a directors loan.
Yes but that only works until you pay off the loan. I want to build a calculator which allows for the long-term
@@ThatAhmedKhan let’s say it’s a £40,000 property and it brings in £400 a month
That’s going to take a while to recoup that loan that you put in but I completely get it’s for calculator purposes
None the less great video 👌
Never ever seen as good as this video on this topic bro, much appreciated ❤🙏
I’m glad :)
Great video! I heard recently some advice regarding buying SA properties in own name due to tax benefits. Since I have just got my mind around buying in a company, I am not that comfortable buying in my personal name. What is your view regarding buying BTL and SA properties in the same company?
In the example of taking equity out of the property, you had a £75K loan against a £100k property, after 10 years the property is worth £200k so you remortage at 75% LTV and get £150k of which £75k goes back to the original lender to settle that mortgage and £75k can be taken tax free - which is great. However, you're surely then servicing a mortgage that is double what it was and then likely putting yourself in a corner in terms of profitability/tax liability, with the initial example of HMRC seeing your profit as exclusive of any mortgage deduction other than that 20% relief? Maybe I've missed something here - hope I have to be honest?
Ahmed, thank you for putting out this video. I've been searching for a clear breakdown on this subject and you summarised all the points I was looking for perfectly! You've earned another sub
I'm glad you like it! Thanks for the sub bro.
Could you not just take the money out of the ltd company as dividends at 8.75% tax as a basic rate tax payer? Making this comfortably the best option for paying the least tax?
A divided has to be paid from profits. Therefore you’d have to first pay 19% corporation tax and then the 8.75% dividend tax, which would end up being more than the 20% income tax.
Thank you very much !nobody makes this info so clearly ,you definitely deserve all the success 🙏
ahmed i watch a lot of property videos and your simple non rambling explanations are spot on. Just dont forget LTD also is better for things like deaths etc , short term pain long term gain
You are absolute incredible. I love your practical approach and numbers prespective
Hi please correct me if Iam wrong that 75k made in personal name it’s still subjected to CGTno doubt of that which is btw 18-24%
This is a brilliant video and exactly what I’ve been looking for. Thank you!
Glad you liked it!
if I am an international property buyer and will be buying properties with full cash payments (no mortgages of any kind involved), should I buy them in my name or LLC you think? I am considering to buy multiple ones for rental purposes so they can supplement my annual expenses while living in the UK...thanks for the help.
Ahmed, would you still recommend serviced accommodation for a revenue stream?
i dont that understand that 30k can you please explain
? where does come from?
Great informative video. I was wondering how the comparison would be if instead of paying a salary to the limited company owner (reducing profit to zero) instead they were paid through dividends?
But then you would have to pay corporation tax
Such an informative video Ahmed. I have 3 BTL in my personal name. I didn’t know that when pulling money out by remortgaging that you pay tax on it in a limited company. 🤯 I have just subscribed!
Elite and World Class video!!!! Super clear and straight to the point!!
From my understanding the benefit of buying as a limited company has more to do with long term IHT planning and not the year to year tax payments
Could you not pay yourself in dividends?
Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $260K for sometime now, my major challenge is not knowing the best entry and exit strategies... I would greatly appreciate any suggestions.
I agree , I assumed I had a hang of the market at first, I gained $50k one year and I was super elated, not until I stumbled upon a portfolio-adviser whose been guiding me since the market's been sham after the pandemic, to my utmost surprise I netted a whooping $280K during this dip, that made it clear there's more to the market that we avg joes don't know
Jenny Pamogas Canaya is actuaIIy the one that guides me, she’s a hlghIy-sought out advlser, so I’m not certain she’s acceptlng new intakes, but you can give it a shot. It wouldn’t be proper to just Ieave her number Iying around, but she has a webpage you can look at if you googIe her name
So the £75k you pull out when you remortgage is still tax free and no CGT when you sell? Can taking out the £75k also help mitigate GCT later on?
Watched a few videos on this subject.. this made it easy to understand
11:00 You would only pay that large sum of tax if you take it out, you can keep it in and buy other properties and not pay tax @Ahmed Khan
Exactly. Very important point he missed Its one of the biggest reasons why people invest through Ltd's
What about if you’re already in the 40% income tax bracket before you have any property? Can you do a worked example of this?
Great video!
Hi Ahmed, do you mean even other than your principal residence BTL bought in your own name and when you sell in the future you do not have to pay tax for capital gain?
The capital gains tax difference (personal vs company) might be worth considering.
Correct
But when you factor in 33.75% dividend tax for higher earners.. even in a Ltd company, you’re still paying over 50% tax…
My question is how can anyone make any money under these circumstances ?
Thank you for an easy to follow guide. Your calculator webpage isnt secure though, so wont open in my browser, which is a shame. But a great video never the less.
Hmm I’ll work on that
Crazy how informative this video is. You got a new subscriber! You explained it so well!
Thanks and welcome!
surely this just depends on how much you plan to scale?
Yes. As he said, if you are buying more than 2 or 3 properties, you are better off buying in limited company.
But in the first example its better because accounting fees is so high only
Great content Ahmed. I just came across your video last week when I was looking for SA related content and I must say, I learnt more on your video than I learnt from the paid course I attended. I am about to take up a property for SA by next week in Peterborough and I have signed up for your mentorship programme but I'm yet to get a response. Great job bro
I have in the last 12 months purchased 4 properties in my own name to add to the 4 I already owned. This was a decision I made to carefully just about stay within the 20% tax bracket (I have no other job income) many video I have watched have suggested that I made the wrong decision but after watching your video I am more confident that unless I buy anymore only then will I need a LTD company structure as I would be in the higher tax bracket. I also personally think that the government will change the rules again once there is enough people suck more money out of in LTD company structures. Thank you so much for this great video Ahmed😊
My thoughts too. I lose about £500 a year on my BTL in my personal name, but can't help think that the government will absolutely go after LTD company property wrappers next.
You made the correct decision in my opinion. If you have no income you're far better buying in your own name and using that as your income in the 20% tax bracket rather than all the hassle of tying up in a LTD company for probably no financial gain.
There are too many people giving one size fits all advice when it is never the case. Well done for sticking with your decision
You cannot raise the rents now 😅
The average rent of each property is £520/month after repairs? That is very cheap I assume they are north-north!?!
Realistically how would you spend or access the money with in the limited company bank account
Such a useful video! This subject has been on my mind for awhile and you helped me understand the pros and cons
Glad it was helpful!
Thanks for the great video! What should you do if your base salary is already within 40% tax?
Go limited.
Most likely Ltd will be better for you but speak to an accountant just to doublecheck based on your situation
Ahmed - if you take into account dividend allowance, it makes it even more favourable to invest through a Ltd company.
Yep correct :)
Just for clarity, by annual salary you're referring to your job (whatever that may be, and whether it's on PAYE or not)?
Yes correct
Hi Kahn my main job is in the region of £68k - £72k, would it be more profitable if leave my BTL property in personal name or Ltd company ?
@@Michael.P247 definitely Ltd mate
Subscribed! Great video! Where can I find the comparison calculator you was using
Here, linktr.ee/ahmedkhann
Does it cost anything to transfer property from a personal name to a limited company?
I’d like to know this, and the other way also
Great video
Really appreciate it
Is there any chance of getting an advice from you.
I would like to know if I want to move a BTL property from personal name to LTD company:
What would be the cost?
Most likely you will have to pay stamp duty
@@ThatAhmedKhan
Are there any more costs?
How hard is this.
You should open courses for people my brother.I will definitely be first in line.
Just made a confident decision on a house after watched your video
Keep it up brother .appreciate it
You can find my free courses here: bit.ly/Ahmed-Khan
Thanks Ahmed.
What if you have properties in joint accounts.... Then you can go upto 4 properties in joint names!!!! One of my friend had done this. And from 5th property they are buying in ltd company.
Hope this helps too
Yeah that can also work
The cheapest monthly rate for an accountant I could find was £100 a month for my limited company 😭 so it would be even less profit
Yes also u can buy with a sipp and then it's tax free cos its pension proof 😮🎉
What if I’m not planning to take money out of the ltd company ?
You’d have to pay corporation tax which is 19%. Or u can reinvest that money into another property/assets/business expense and keep ur profits low and pay less tax
Solid content. Subscribed
Thanks bro!
where can we get the link for the calculator at th start of the video? great video btw
Here you go www.propcalc.co.uk/
Great video, you’re really good at what you do and teaching thank you
Glad you liked the video!
I know what you are trying to convey... and some info is useful, but no use of dividends (albeit the tax advantage has lessened over the past few ears) has been mentioned. There are advantages with IHT in a Ltd Company... also the use of Alphabet shares. This is over simplified as it also depends on what you are going to do with your property and personal capital gains could be an issue. Off the shelf Companies are not fit for everyone. Also, just for clarity, you say these examples are for UK.... unfortunately you should state England and Wales. Scotland has different tax thresholds.... we pay more tax.
I'm going to change the calculator so the profits are taken out via dividends as a lot of people are requesting that
Depends on your income
Thank you Mr Khan for all videos … its educational
Glad you found them useful!
Also- ltd company mortgage interest rates are also higher?
Yes marginally.
A limited company can't deduct mortgage payments from rental income only interest is deductible. Also, the 20% relief only relates to interest, not the total mortgage payment.
This video and calculator is for BTL properties and pretty much all BTL properties are on interest only mortgages so the calculator should hold but yes fair points
I wonder what will calculation look like if you are already in 40% bracket and the interest rates are high as they currently are, then llc makes sense from property 1 I guess
Probably the best property tax explainer video I have ever seen!! Well done man!
Appreciate that! 🙏
Don't forget if you pay yourself a salary from a ltd company, you need to pay employee and employer National insurance contributions too. Or you can pay corporation tax and a dividend, but only on profit, not if you actually lost money
I've changed the online calculator to take out money via dividends now as it seems to be the simpler solution :)
@@ThatAhmedKhan or... you can charge interest on your directors loan, then you don't pay corporation tax or national insurance. You pay income tax, but there's a separate £1000/£500 tax allowance for it depending on which tax band you're in.
Where does national insurance play into this?
Good video- what about the cost of a commercial loan vs BTL Mortgage? - also costs to move properties from personal to ltd company ownership?
Stamp duty
Can you point in the direction of a place I get get limited yearly accounts done for £500 a year please. Much appreciated. Great video
Try these guys: bit.ly/osomenotion
Ahmed I’m not sure you do pay income tax on debt in a limited company. It’s still debt I will check with my accountant
You don't pay corp tax but if you take that money out of the company you have to pay income tax
...depending on level of director's loan on the account. I would suggest also a cheaper rate at dividends tax rate instead of income tax.
But this video goes into great depth! New subscribers gained!
there is a bit in this video where you say that when one refinances a property owned in a LTD company and draws down on the surplus loan - then one is liable to pay tax on it.......as the loan is effectively treated as profit.........how sure are you about this?
The loan isn't treated as profit, it's just an increase in cash.
@@ThatAhmedKhan the funds (albeit loans) belong to the LTD company which is why one is taxed if the director / SH extracts them as div or salary- however there are ways around it if planned ahead….
The compnay have to pay NI on the salary you are receiving from it
Amazing Video mate! Please do another comparison when someone sets up a property management company rather than a limited company
What do you mean by this sorry?
Excellent video. Thanks.
Please help and suggest which lender provides company btl mortgage at same rate as personal btl. It will be very helpful to know such lender
Buy to let mortgages in a limited company are more expensive than your personal name
In limited company you get more control and can decide when and if you want to take money out. When purchased a property under your name, you have not control.
My God - you are such a genius - How does your mind work - Truly a Genius. What is your IQ MAN!? I am sure there is no calculator for that one! Your IQ must be a very large number and I bet you - you are a chess player can solve the Rubbicks Cube and you find Sudokus easy to solve. Wait a minute you are not a professor - Are you? Well you should be. Thanks for all this flawless education.
Appreciate your message! Thanks for watching!
But with the limited company you can just pay the profits as dividends instead of income being taxed as dividends
Yes but then you also have to pay corporation tax
Tax on dividends is is much lower than 20%. Potentially 8%. You can deduct a lot of costs before you calculate tax. You have double tax allowance.
What happens if you take dividend payments instead of salary and if you make someone additional like a spouse as a partner/shareholder?
You pay less personal tax on dividends but you would need to have paid corporation tax on the profit before they are withdrawn. If you add a spouse as a shareholder who doesn't work you can give them a dividend of £12570 and they pay no tax so it can work out quite tax efficient. Or even if they are a 20% taxpayer and you are a 40% taxpayer.
Correct
Hey great video, one thing are you 100% sure that's how the 20% tax relief works on property held in your own name? My understanding was the 20% gets taken off the mortgage amount before tax. So on a 5k mortgage you would get 20% relief so you would pay tax on 4k. Not pay on 5k then claim 20% of the mortgage back. This would mean only £200 of your tax bill not £1000 meaning a ltd would still be more beneficial in your first example.
I've doubled checked this and I'm pretty sure what I've said is correct. I've looked at worked examples on the Gov website and they confirm this :)
@@ThatAhmedKhan Hi, it isn't quite correct. The 20% tax relief is only on the mortgage interest, not the repayment aswell. Also, taking money out of the business rather than taking it as a salary at 20%, you would want to take it as a dividend which will be 8.75% at the time of this message. Other than that, great video man. Keep it up
and that's talking about through a LTD company there in my comment above
@@JordaanW yes you’re correct about the mortgage interest. In the video I was talking about buy to let mortgages, which are 99% of the time interest only, so I didn’t quite clarify that and just assumed that everyone knew that but maybe should’ve pointed it out.
I’ve also changed the online calculator so it now is based on dividend :)
@@ThatAhmedKhan Nice one! Keep up the content buddy
Can the govt call your expense I.e Mortgage interest as profit, when it's clearly an expense. Can they not be legally challenged on this? Or is it a case they can do what they want?
Great video, love how clear it is and how you explain it without an agenda
Thanks bro!
However there is the fact you can withdraw money in the form of a directors loan if the investment was loaned to the company from your personal account. This will be more tax beneficial than the calculations you have shown. However, still a great video and great information
Yes but you can only do that until the loan is paid back in so I did not want to include that in the calculations as that is not viable in the long-term
Wow, went through the details really well, thanks for making me understand better!!
No problem!
Great vid, cheers.
Well if you owned your property in a limited company you would pay yourself by dividends. That is the advantage.
I am lucky 95 percent of my income is BTL and i have managed to stay as a 20% tax payer one day thresholds will rise sooner the better
Thanks for the great info.
Can you teach me the property business??
You can check out my free courses here, linktr.ee/ahmedkhann
Do normal people not need an account? If they have a rental property that is?
If you have a limited company then you will need an accountant
@@ThatAhmedKhan I agree , but even someone without one would need an accountant, so it would be the same tax
What happens if the property pushes you £2000 over the 40% threshold?
Then you will pay 40% tax on that additional amount
Great to see someone talking about the UK market! Do you know if it's a difficult process to move the property from personal name to a limited company once you pass the income threshold? Also, how about capital gains tax? Is this more costly in personal name or limited company? Many thanks 😊
No it’s not difficult, speak to 118 property, they are experts in advice on this 😊
Most people think of investing in more than one property. If the 1st is in individual name, can it be transferred to Ltd company while buying 2nd? How does it work?
It can but then you will have to pay stamp duty
Can you make a video on pdr, converting office space into residential
Great video Ahmed 👏🏼
Thank you 🙌
Loving the videos they’re very in depth and informative
Glad you like them!