Individual vs Corporate Tax Calculator

Why Transfer Property from Sole Trader or Partnership to Limited Company in the UK?

Transferring a property from a sole trader or partnership to a limited company is starting to gain popularity in the UK, but that is not without reason. There are several reasons as to why a business might consider this move, which include tax efficiency, protection of personal assets and increased credibility.

What are the Advantages of Switching to a Limited Company for Property Ownership?

Some key benefits of transferring from sole trader to a company are:

• Individuals pay more tax on the same amount of profit or taxable income in comparison to a limited company.
• Mortgage Interest is fully deductible for companies but not for individuals.
• There is limited liability in a company in comparison to the huge risks that an independent business landlord must bear.
• Retain undistributed profits.
• Effective Inheritance Tax planning.

What Factors to Consider before Switching to a Limited Company for Property?

Before making a switch from a sole trader or a partnership to a limited company, it is important to consider the various factors like the costs involved, the impact on your existing mortgage, as well as the potential tax implications. One important thing to note is that transferring properties into a limited company attracts Capital Gains Tax for the seller (in this case, the individual) and Stamp Duty Land Tax for the buyer (in this case, the company).