Surge in landlords forming limited company to beat tax hike

A growing number of landlords in the UK are considering forming a limited company to run their business and offset tax costs, according to a survey.

The National Landlords’ Association (NLA) says that more than 40% of landlords questioned are considering forming a limited company and just 1% of landlords had already done so.

The NLA says that this low take-up is down to the complicated process of transferring property into a company.

From their survey, 31% of landlords said they had no plans of moving their properties into a limited company while 29% said they were unsure about whether to form a limited company or not.

The question of incorporation has come into focus since buy to let landlords are not able to claim mortgage interest relief when it is phased out from April next year.

Landlords will not be able to reclaim their mortgage interest costs


Under the new tax regime, landlords will not be able to reclaim their mortgage interest costs before declaring their taxable profits.

The NLA says the switch is ‘The Turnover Tax’ with landlords being taxed on their rental income rather than on their profits.

This move will move many landlords who pay the basic rate of tax into a higher tax bracket. Those landlords who are already higher rate taxpayers will be left with larger tax bills.

However, landlords who restructure their business as a private limited company will only pay corporation tax on their actual profits rather than on their turnover.

The NLA’s chief executive, Richard Lambert, said: “Transferring property is not a straightforward process so it’s not a surprise that so few have taken action.

‘Some will realise that incorporation simply does not stack up’


“Landlords need to carry out research and some will realise that incorporation simply does not stack up financially as they incur capital gains and potentially stand duty charges.”

A director of the Association of Letting Agents, Richard price, said it was no surprise that so many more landlords are considering incorporation and if the trend does increase then there will be less business for letting agents as landlords take a more hands-on approach to running their portfolio.

Landlords warned of fraudsters advertising on Gumtree


Meanwhile, a warning has been issued for landlords to be wary of fraudsters posing as landlords on the advertising site Gumtree as they may be potentially offering a landlord’s own property for rent.

The Residential Landlords’ Association (RLA) says that fraudsters are offering flats at affordable and attractive rates and insist that a deposit be paid by the potential tenant to secure a viewing.

The amount being asked for is around £1,500 and fraudsters are also using logos including the RLA’s ‘DepositGuard’ scheme to help their frauds look authentic.

A spokesman for the RLA said: “A genuine landlord will never ask someone for money for a viewing.”


About S Thompson

Simon Thompson is Editor of Landlord News and CEO of

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