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Setting up a company to pay mortgage through?

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Ribenapigeon
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PostPosted: 14:31 - 29 Nov 2017    Post subject: Setting up a company to pay mortgage through? Reply with quote

Is it possible to set up s company to act as my landlord which then takes the "rent" i pay it to pay my mortgage?
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BTTD
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PostPosted: 14:53 - 29 Nov 2017    Post subject: Reply with quote

Yes it is possible.

You know that companies pay corporation tax right?
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Rogerborg
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PostPosted: 14:57 - 29 Nov 2017    Post subject: Reply with quote

Skip to the end, what wheeze are you planning to pull?
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colink98
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PostPosted: 15:10 - 29 Nov 2017    Post subject: Reply with quote

Rogerborg wrote:
Skip to the end, what wheeze are you planning to pull?


Maybe he watched a rerun of Bread....and wants to somehow claim housing ben's to pay his landlord (himself)
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Itchy
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PostPosted: 15:16 - 29 Nov 2017    Post subject: Reply with quote

Yes it is possible.

The question is why would you do such a thing?

Off my head in no particular order:

Corporations by their nature can vanish in a puff of smoke and have limited liability. This means loans to companies have higher interest rates to cover for this possibility.

Ltd companies pay corporation tax even on dividends.

Ltd companies have tax relief of about 20%. OTOH private individuals and landlords get tax relief on loan interest at their marginal rate of tax (this is being tapered to 20% by 2019).

Oh and you have to do numerous returns each year that cost money if you fail to file them on time.
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Freddyfruitba...
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PostPosted: 15:18 - 29 Nov 2017    Post subject: Reply with quote

Off the top of my head...

You'd need to transfer ownership of your house to the company (which would involve ££, including stamp duty). You'd need a new mortgage (which would be a business loan at a higher rate than a domestic mortgage). I'm sure there's plenty more gotchas; but as Roger asked - what's the end-game?
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The Shaggy D.A.
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PostPosted: 15:26 - 29 Nov 2017    Post subject: Re: Setting up a company to pay mortgage through? Reply with quote

Ribenapigeon wrote:
Is it possible to set up s company to act as my landlord which then takes the "rent" i pay it to pay my mortgage?


It wouldn't be your mortgage Confused
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Ribenapigeon
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PostPosted: 16:45 - 29 Nov 2017    Post subject: Reply with quote

Just been to training on universal credit. So wondering how beneficial renting from myself would be if on benefits rather than just claiming the interest cover. I know celebs did a similar wangle with lending to themselves from profitless companies.
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MarJay
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PostPosted: 17:18 - 29 Nov 2017    Post subject: Reply with quote

I think that would be benefit fraud whichever way you spin it.
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Itchy
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PostPosted: 17:26 - 29 Nov 2017    Post subject: Reply with quote

It happens.

Somebody I know does a similar rental scheme scam the thing is though you need three participants else it doesn't work. Plus all it really does now is defer the tax and or income as if you choose to keep it as retained earnings there is no way to get it out.

Dividend it to yourself and other partner and you pay non corporate dividends.

This is then income which is taxable so you're paying tax three times.
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Ribenapigeon
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PostPosted: 18:34 - 29 Nov 2017    Post subject: Reply with quote

MarJay wrote:
I think that would be benefit fraud whichever way you spin it.


So say s self employed person who lives in a property their business owns but rents to him and the business makes no money so they qualify for housing benefit? Its a theoretical possibility
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Freddyfruitba...
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PostPosted: 18:47 - 29 Nov 2017    Post subject: Reply with quote

Ribenapigeon wrote:
So say s self employed person who lives in a property their business owns but rents to him and the business makes no money so they qualify for housing benefit? Its a theoretical possibility

Only theoretical if even that, because the HB people would simply look at it and call foul. End of.
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Nobby the Bastard
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PostPosted: 18:52 - 29 Nov 2017    Post subject: Reply with quote

jnw010 wrote:
Yes it is possible.

You know that companies pay corporation tax right?


Only on profit
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Ribenapigeon
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PostPosted: 19:13 - 29 Nov 2017    Post subject: Reply with quote

Freddyfruitbat wrote:

Only theoretical if even that, because the HB people would simply look at it and call foul. End of.


There's no such thing as Housing Benefit with universal credit. Its a housing cost component.
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Rogerborg
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PostPosted: 20:08 - 29 Nov 2017    Post subject: Reply with quote

It is actually a fair point that benefits paid to you will only cover your interest payments to the bank, but benefits paid to a landlord will cover their interest, and the capital, and profit on top.

Talk about a perverse incentive.
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Andy_Pagin
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PostPosted: 20:11 - 29 Nov 2017    Post subject: Reply with quote

so, tl;dr;

You have to be extremely rich for this sort of thieveing from the taxman tax avoidance to be workable?
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Itchy
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PostPosted: 20:25 - 29 Nov 2017    Post subject: Reply with quote

Andy_Pagin wrote:
so, tl;dr;

You have to be extremely rich for this sort of thieveing from the taxman tax avoidance to be workable?


Not really rich you generally have to be clever about it.

The poor man's version of it is quite simple. You get an estate agent to come round value your home then give him or her some money to massively undervalue it. You sell the home to a relative for this price.

This satisfies the arms length criteria.

The relative then puts the property up for rent to the wife of their relative and they 'move back in' (they never moved in the first place). The rent put at a very high rate.

The original seller now pishes the money from the house sale up the wall (or hides it). They then go cap in hand to the council and claim everything.

The relative gets 20% of the housing benefit to pay their additional tax incurred on the housing benefit. The council then gives them the artificially high rent.

Family lives in luxury getting £500+ a week from the council.



I've seen this scam happen so many times it's unreal. The only thing that semi stopped it was the lowering of the housing benefit percentile and also the lowering of housing benefit where there are excess bedrooms. But that's still £20K a year for doing nothing.
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Ribenapigeon
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PostPosted: 20:38 - 29 Nov 2017    Post subject: Reply with quote

Rogerborg wrote:
It is actually a fair point that benefits paid to you will only cover your interest payments to the bank, but benefits paid to a landlord will cover their interest, and the capital, and profit on top.

Talk about a perverse incentive.


Its a loan as well. The government's interest support for mortgage holders has to be paid back and takes six months to get.
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BTTD
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PostPosted: 22:43 - 29 Nov 2017    Post subject: Reply with quote

Nobby the Bastard wrote:
jnw010 wrote:
Yes it is possible.

You know that companies pay corporation tax right?


Only on profit


No shit. Simplistically, interest only loan will work. If there are capital repayments there's going to be some profit element to fund that. Then again if he's going to get the government to pay the increased rent so he can pay the corp tax, it is indeed a moot point.
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smegballs
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PostPosted: 10:53 - 01 Dec 2017    Post subject: Reply with quote

Out of interest, what would happen if you wanted to give a house away for free? Let's say to a non relation and non friend. You are a millionaire giving away your old flat to a homeless guy out of 100% altruism.

Is there something saying you can't just give it away? Would there be any difference between giving away a 200k car or a 200k house?
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grr666
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PostPosted: 11:36 - 01 Dec 2017    Post subject: Reply with quote

smegballs wrote:
Out of interest, what would happen if you wanted to give a house away for free? Let's say to a non relation and non friend. You are a millionaire giving away your old flat to a homeless guy out of 100% altruism.

Is there something saying you can't just give it away? Would there be any difference between giving away a 200k car or a 200k house?

Capital gains tax is the biggest flaw in this plan. Government has to chisel a bit from more or less every
lawful transaction ever made, and property transactions are among the largest we'll ever make, so a nice cash cow for UKPLC.

https://www.telegraph.co.uk/tax/capital-gains/do-i-have-to-pay-tax-when-i-give-away-a-property/
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Jmoan
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PostPosted: 12:17 - 05 Dec 2017    Post subject: Reply with quote

MarJay wrote:
I think that would be benefit fraud whichever way you spin it.


If the states happy to give handouts to second homeowners then why would it.
It would not be so great for the more niave honest doleseeker or low paid worker but the state is already screwing them over and attempting to keep them in poverty.

Someone who's been made redundant after being responsible and saving their cash would also be at risk of having it all drained away unless there was something like a trust to protect it.
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Nobby the Bastard
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PostPosted: 18:28 - 26 Jan 2021    Post subject: Reply with quote

Racist is as racist does.

Are you channeling Donk?
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Nobby the Bastard
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PostPosted: 11:56 - 28 Jan 2021    Post subject: Reply with quote

KarlAnderson wrote:
I know that it is possible to make money this way. A lot of people make money by subletting their property and act as landlords.


And in most cases they are in breach of their rental agreement and if caught will be evicted.
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