Incorporating to benefit landlords

The tax changes impacting the buy-to-let market have certainly taken their toll on landlords, many of whom could be finding their profitability seriously compromised. As a result, many are turning to limited company arrangements to avoid being hit with additional tax, but could this be an option for you, and how can you go about it?

a) Register as a limited company with Companies House. This, in a nutshell, is incorporating. You can do this yourself online, or you may want to go through a solicitor or accountant.

b) You'll need to provide a few basic details, such as your company name, address, the director, details of the company's shares/shareholders and what it does (this will require you to check your SIC code, or standard industrial classification of economic activities)

c) Once you've officially set up your company, you'll need to register for corporation tax. Again, this needs to be done through Companies House – you can arrange this online using your 10-digit Unique Taxpayer Reference (UTR), which will be sent to your company address within a few days of becoming incorporated.

d) You're required to register for corporation tax within three months of incorporating; you'll face a penalty for registering late. You'll need to tell HMRC your company's registration number, the date you started to do business (your company's first accounting period will start from this date), and the date your annual accounts are made up to.

Once that's sorted, it's official – you're a limited company for tax purposes, and will now pay corporation tax on your company's profits!