The use of limited companies for buy-to-let transactions could result in double taxation, a leading accountant has warned.
Speaking at the Association for Short Term Lenders (ASTL) annual conference accountant Nick Cartwright, a tax partner at Smith & Williamson, warned that landlords could have to pay corporation tax and a levy on the extraction of their capital.
He said: “[The] overall tax rate, if rental income is distributed, could be as much as 50% with current rates.
“Incorporation is good if you want to build up money within the company, but not if you want to live off the income as it is earned.”
The accountant underlined that landlords would be taxed on taking money out of the company and could also be liable for national insurance contributions, payable both by employer companies and directors.