Hi I'm currently trying to get my head around the choice of buying my CZ apartment through an SRO (LTD company) or as an individual. As I've never ran a company, or owned a rental company, before maybe someone could tell me if I'm on the right track of thought with this fictitious example... @ 2015 I decide to sell my apartment realising a £150,000 profit. The apt was purchased jointly with my wife and the joint capital gains allowance has risen to £23,000. No other gains are being realised that year. Current income is at the 22% tax bracket (both say @ £15K below the 40% tax bracket). Situation 1. Apartment was bought as an individual hence tax is due on approx 150,000-23,000=127,000. Tax due = £30K at the 22% level (=£6600) and the remaining £97,000 at the 40% tax level (=£38,800) (NB no CZ cap gains tax as apartment was held for > 5years). Total net profit = £150,000-£6,600-£38,800=£104,600. Situation 2. Apartment bought as an SRO company. On sale the £150,000 profit is immediately taxed at 24% (CZ company tax rate) leaving £114,000 profit. Assuming the company can pay its dividends out over a number of years at the 22% tax level total profits = £114,000*0.78=£88,920. For the above scenario it would have been much better to purchase as an individual. What are the major flaws in my understanding? Cheers

Mark, I don't think that there are any flaws in your understanding. It's always been my belief that as a UK taxpayer it's better to buy property as an individual (or jointly is even better) as opposed to as a company. You've forgotten taper relief, so after 10 years you'll only be taxed on 60% of your taxable gain, so the tax calc is : Taxable Gain (after CGT allowance) = £127,000 * 60% = £76,200 Of this : £30,000 @ 22% = £6,600 £46,200 @ 40% = £18,400 Total tax to pay = £25,000 In your back pocket = £125,000 (£150,000-£6,600-£18,400) Repeat this once a year for a few years and you can retire. Andrew

Cheers for the clarification Andrew. Totally forgot about the taper relief, which makes it even better!! Do you happen to know if the 40% taper relief is generally more generous than the indexation allowance which a company would receive (which I've also omitted in my example)? I was hoping to purchase my Kosik apartment as an SRO as I'm moving to Canada for 2 years hence picking up my EU card for the residency isn't exactly cheap! However I'm now thinking its worth the hassle to make sure and purchase as an individual. Especially when one considers the 3% tax payable (on current market value) if the apartment is transferred from SRO to individual ownership. All I need now is for the apartment to make £150,000 profit!!

Mark Apologies for giving the vey basics in this forum. International tax is very complex and the reason why I have to work today. You will be taxed at 40% less tax paid in the country concerned. Given this is likely to be a lower rate elsewhere you will effectively need to budget on 40%. The CGT, while nothing is payable in the country concerned is payable at 40% (less taper relief) in the UK. So always laugh at the offer agents provide saying you have no CGT to pay. Unless you are living in a tax haven of course (in which case you would probably not be investing in a country with tax in the first place!). To address your main query - company or individual? Depends on your financial plan. Without a long term business plan it is near impossible to provide a tax strategy. As to golden rules, well if you are looking at the very short term ie trader, company is best. If you are looking at medium term within 10 years individual would be best. If long term saving and wealth creation including avoiding IHT (there is no point worrying about CGT if you are then keeping the wealth in your own name!) then the company again is likely to be the favoured option. Of course we set up trusts to avoid tax in tax efficient offshore structures. These will be favoured options for the very serious. There is no point keeping a wealth of £1m to sell this before death or keep on your estate and pay 40% to Gordon Brown. Long term wealth without good tax planning is like packing 20 excellent bottles of wine in a suitcase and expect airport handling to give it you back on one piece. Some will be fine many break up. Colin - Cranleys Chartered Accountants.