LP restructuring firm targets broker clients for BTL tax cut

Buy to Let Restructuring aims to reduce the burden of looming taxation laws on buy-to-let landlords by setting up a corporate umbrella for a landlord’s existing property portfolio.

Brokers referring clients successfully are offered commission by the firm.

From this April, new tax rules will take effect, which will see landlord tax relief gradually cut from marginal rate of income tax to basic rate over the next four years. This means somebody now claiming 40% in tax relief will only be entitled to the basic rate by 2021.

The firm calculated a higher-rate taxpayer would see their returns obliterated once their mortgage interest hits 75% or more of their rental income.

However, there is a way around it: landlords registered as limited companies only pay corporation tax, currently set at 20% and to reduce to 17% in 2020.

Co-founder of Buy to Let Restructuring and director of property developer Loftco, Mark Andrews, said: “April 2017 heralds a depressing new dawn for many buy to let landlords who have yet to realise the doomsday scenario they have potentially been dealt by the Treasury.

“Unless awareness about the changes April will bring is generated immediately, followed by swift action on the part of landlords, the industry is facing something of a crisis.”

Buy to Let Restructuring is made up of a number of property, legal and finance professionals, including industry lawyer Chris Coates, ACG Financial principal Gary Lewis and accountants Gary Butt and Mandy Davies.

They believe general awareness of these taxes in the buy-to-let sector is “worryingly low” with “many landlords completely unaware of their imminent roll out, and large numbers ignorant of the extent of the huge impact they will have.”

The way Buy to Let Restructuring works is by allowing landlords to register with the firm through its website, which then creates a limited company for the landlord’s portfolio.

The cost for the service amounts to a flat fee of £1,950 & VAT and an additional £150 & VAT per property – warranted as the restructure involved a complex set of legal documents, the firm said.

Buy to Let Restructuring said it was keen to work with intermediaries, including letting agents, financial advisers and accountants, and was paying commission for any successful referral. “We understand that the best way to get in touch with landlords is through re-sellers,” it said.