A Stamp Duty Loophole?

A Stamp Duty Loophole?
The industry expects many landlords to accelerate their deals to completion before the new tax surcharge goes live in April.

However, on scrutinising the legislation it has been noted that corporations are exempt from paying extra.
Landlords who are seriously considering further expansions to their property portfolios can look at flipping their properties into a privately owned business, therefore swapping landlord taxes for corporation taxes.

The number of mortgages approved for companies has gone up more than 200% since the Chancellor's first wave of tax relief changes in July 2015. This isn't a coincidence.

The benefits are two-fold. Firstly, you get to avoid the disappointing Stamp Duty surcharge of 3% on top of your current rate, making purchases cheaper. Secondly, landlords with corporations will be subject to corporation tax, which is set to reduce to 18% (currently 20%) by 2020.

Turning your portfolio into a company may seem a no-brainer, but things aren't as straightforward as that. Landlords will only be exempt from the surcharge if they have a portfolio of more than 15 properties, therefore incentivising only those who have smaller-scale portfolios.

Also, setting up as a corporation isn't easy, there is no guarantee that flipping your portfolio into a business will make you significantly more money, especially given the cost of start-up. Call the office now for more help or advice.