Limited Company FAQ's

When declaring your rental income on a Self-Assessment, you can claim the costs in managing and maintaining the property, reducing the tax you will pay. The most common expenses are:

No - since April 2020, you're no longer able to deduct any of your mortgage expenses from your rental income to reduce your tax bill.

Yes - when you have rental income from properties in the UK or abroad remember that you need to declare the income on your self-assessment, if you are a UK resident. If you are not a UK resident then you must include your UK sourced rental income in a UK self-assessment return. This includes a rental property, second property and portfolio of properties.

As non-spouses cannot benefit from the exemption available for spouses, it is likely that only dividend sharing with a commercial basis will be acceptable to HMRC.

There are several considerations when appointing your spouse or civil partner as a second shareholder:

Yes - the issue of income shifting was formally clarified in respect of shareholders who are married or in civil partnerships.

Adding a second shareholder is straightforward, but may create issues you should be aware of. If the procedure is not carried out correctly, HMRC may deem the appointment of a second shareholder as ‘income shifting’. This means transferring some of the taxable profits you have made to another individual with less tax liability, thereby reducing your own tax liability.

The dividend allowance means that you won’t have to pay tax on the first £500 of dividends received in a tax year.

If you are a company director, then you have a legal duty to protect the company’s assets and to carefully consider whether you have sufficient funds to pay its liabilities (for example, upcoming VAT and corporation tax payments) before a dividend can be paid.

Most directors pay interim dividends. These are declared and paid in the middle of an accounting year i.e. before the accounts are finalised.