Other Implications of Property Business Incorporation

Previously we covered Stamp Duty Land Tax (SDLT) implications of transferring your property portfolio to a limited company; you can read that article here.

However, transferring a property to a limited company has other implications apart from SDLT.

Annual Tax on Enveloped Dwellings (ATED)

Annual Tax on Enveloped Dwellings (ATED) is an annual charge that applies to a company that holds a dwelling valued over £500,000.

The amount chargeable depends on the value of the property, for example, for a property valued between £1 million and up to £2 Million the annual charge would be £7,500 for the period of 1 April 2020 to 31 March 2021.

There are number of reliefs available, especially where properties are purchased by the company to run a qualifying rental business, although ATED returns must still be filed annually.

An initial late filing penalty of £100 will be charged by HMRC, which will increase over time incrementally similar to Self-assessment late filing penalties, if ATED returns are filed late.

Relief will be denied if there is a non-qualifying occupation of the property during the company’s ownership of the property, for example if the property is occupied by an individual connected to the company.

In our next post we will be discussing an SDLT scheme that was pitched to one of our senior advisors here at Intact Accounting and we can see his views on this scheme which promises to reduce SDLT payable.

If you have any questions about how SDLT or ATED can affect your property business please contact us on ​​​​​[email protected].

Alex Bahamin ACCA MAAT

About The Author;

Alex is a qualified chartered certified accountant, member of ACCA and AAT.

He is a property tax advisor, investor and has been helping landlords keep more of their wealth for themselves and their families.

With both technical expertise and personal experience of being a property investor himself, Alex can help other property investors save tax and structure their businesses in the most efficient way.