Call our team today on 0161 959 0166
Office opening hours
Mon - Fri 8.30am - 5.00pm

Why form a limited company?

Why form a limited company?

From April 2017, tax relief on mortgage costs for buy to let landlords has begun to be gradually phased out. Under the previous rules, landlords had been allowed to deduct mortgage interest and other expenses from their rental income before calculating tax liability, consequently allowing mortgages to be paid off before rental income was declared. With the new changes, however, interest relief has been lowered to 75% for this tax year and will continue to be cut by a further 25% each year until 2020, when landlords will start to pay tax on their entire rental income. In its place they will receive a tax credit equal to 20% of their interest costs, pushing up bills for higher rate and additional rate taxpayers and decimating previously secure profits.

Furthermore, as declared rental incomes rise accordingly, an estimated 440,000 landlords will be pushed into a higher rate tax bracket, thereby incurring additional costs. However, these provisions are only applicable to individual taxpayers and are exempt to landlords operating through a company. This is because limited company finances are legally separate from individual accounts, which means that any rental profits are subject to corporation tax at a (current) flat rate of 19% (lower than income tax) and 17% from 2020.

Posted by admin

FREE no obligation
mortgage advice

Receive a call-back or call us free on 0161 959 0166

Newsletter Signup

Keep upto date with latest news

[mc4wp_form id="338"]

Reasons to choose Charles Louis

Independent FCA regulated mortgage advisers, here to give you the whole market mortgage options.

FCA Regulated


Whole Market Access


Expert Advice


Great Feedback

Speak to an expert adviser today and let us help you. Request a call-back call us on 0161 959 0166