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Using a Company Structure to Shield Rental Property Profits From 40% Income Tax

The Bank of England base rate has now been at 0.5% for around three years and many property investors are reaching the end of any rental losses that they may have built up. This often means that profits are taxed at 40% as property rental profits will be added to any other income that they may have.

So, its vital that investors look at options to avoid this exposure - and appreciate that using a company can help to shield profits from Higher Rate income tax.

Why is Higher Rate income tax an issue?
Fortunately, rental profits are not subject to National Insurance. This means that, £ for £, property investors have an inherent advantage over employed and self-employed people in that the same £100 of rental profit will be subject to around a third less tax than £100 of employment income - due to NI not being due.

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