Phillip Hammond Targeting Corporations?
The recent budget brought no good news for landlords but I guess we weren’t really expecting any were we? What it did do though, is set out the Chancellor’s stall with regards to corporations. This is important because many landlords have started moving their portfolios into corporations to reduce their overall tax burden. There is no major change yet other than reducing the tax free dividend allowance from £5,000 to £2,000 from April next year. Dividend tax was increased last year by George Osbourne which is why he added the tax free softener!
The Chancellor warned that he was aiming to prevent people finding tax havens and for landlords who don’t need to take a regular income, corporations fit this bill. Now he has had to back down over his increased National Insurance proposal for self-employed, he has to find a tonne of money to fill the gap in his spending plans. It may be that corporation benefits are likely to come under fire in the not too distant future, possibly in the Autumn.
Corporations may still be a good idea for some landlords as borrowing restrictions are lower and income tax is lower on dividends, although not as beneficial as they were so if you need a regular income from property, they may not be the best for you. Speak to a tax advisor.
I have released a small (41 page) booklet discussing tax, accounting and corporations which you can purchase in Kindle form for just £1.99. If you want to buy it take a look here. I would welcome honest reviews on Amazon.
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