Shaz takes us through expenses and the differences between being a sole trader and a limited company when you are justifying expenses

As a director of a limited company you always need to consider whether an expense is necessary in order to justify it but as a sole trader has more flexibility

You may want to borrow money from your company or you may be lending money to your company listen in and hear about the best and most effective ways to do this

 

KEY TAKEAWAYS

• The test for a justified expense is higher for a director than for a sole trader, being a sole trader gives you better flexibility
• A limited company has more rules, regulations and company laws to take into account
• If it’s not a salary or bonus you need to pay interest to your company
• You have to treat a limited company as if you are working for someone else where money is concerned, everything must be accounted for
• If you are lending money to your company you should charge interest
• A basic rate taxpayer has a £1000 income tax-free
• You can charge interest  and not pay any tax if you met the criteria
• Your company can claim 19% corporation tax relief on the money

 

BEST MOMENTS

‘For directors it’s about wholly, exclusively and necessary, was the expense necessary?’

‘A lot of small business owners lose sight of the fact a limited company is a separate legal entity’

‘You can have this and not pay a penny in tax’

 

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of

income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

•   Facebook
•   LinkedIn
•   Instagram
•   YouTube.

The question of is it a furnished holiday let or serviced accommodation is one that is frequently asked and in this episode Shaz talks in detail about the criteria and rules and answers questions from his live audience about specific scenarios and the tax implications

There is invaluable advice and learning for anyone who is involved in FHL and SA  in this episode which is a must for anyone involved in letting property

 

KEY TAKEAWAYS

• The property has to be available for commercial letting for 210 days charging the market rent
• It has to be rented out for at least 105 days and if it’s let for more than 31 days consecutively and those days add up to 155 days over the year you don’t qualify as a furnished let
• The aim of furnished holiday lets is short-term letting and you will be penalised by HMRC if you are letting outside of the rules
• If you let out a property for more than 28 days to the same person you don’t charge them VAT and it becomes a short-term let
• With more than one unit you can use the days from other properties
• If you breach the 155 days rule you lose several tax benefits including section 24, capital allowances and entrepreneurs' relief
• Serviced accommodation losses can be used against serviced accommodation profits
• Additional services such as meals, trips out, games room, swimming pool and facilities for children and pets are what can move you to SA

 

BEST MOMENTS

‘It’s a pretty generous system for people’

‘Either side of the one year of grace you’ve got to qualify’

‘Now you are more like a hotel’

‘The more additional services you have the safer you are’

 

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of

income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

•   Facebook
•   LinkedIn
•   Instagram
•   YouTube.

Shaz takes a deep dive into capital allowances and explains, in detail, when and what capital allowances can be claimed and how to effectively claim allowances at the right point

He looks at the different rates and pools that capital allowance items are grouped into and discusses claiming Annual Investment Allowance explaining when it's best to use this. Many people don’t know enough about capital allowances and this can result in them not claiming, listen in and hear great content that will mean you can claim effectively

 

KEY TAKEAWAYS

• Capital allowances are plant, machinery and equipment which are fixed to a building but are not an inherent part of the building
• When you spend money on capital allowances it goes into different pools, depending on the pool it goes to you claim different amounts each year
• Annual Investment allowance is currently a million pounds but only until March 2023
• Where possible claim AIA in one year, it puts you in the best possible position
• When you buy an item it goes into either the main pool, special rate or enhanced capital allowances pool
• It’s important you put your expenditure into the right pool
• If the building is leased you can still claim capital allowances if you have contributed to the building items
• With HMO’s capital allowances claims are now very limited
• Claim all and then make additional funds it’s a balancing charge, claim less and then sell for less there is a balancing allowance
• Be careful about how you claim the allowances if you are considering selling the property in the near future 

 

BEST MOMENTS

‘It’s anything that would need to be ripped out of the building’

‘Most people don’t know about claiming capital allowances’

‘AIA means you can claim all the capital allowances in one year’

 

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of

income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

•   Facebook
•   LinkedIn
•   Instagram
•   YouTube.

Shaz looks at the implications for stamp duty land tax and multiple  dwellings relief when you buy more than one property

He also explains the tax implications for the property you reside in and how the occupation of a property is established

This is a great opportunity to understand more about using  stamp duty land tax and multiple dwellings relief effectively

 

KEY TAKEAWAYS

• If you are buying 2 or more properties from the same person you can claim multiple dwellings relief
• If you are buying 6 or more properties you can use MDR or non-residential rates of SDLT which might work out lower
• If you are not resident in the UK you will pay an extra 2% SDLT when you buy
• As the value of the property goes up, so does the amount of SDLT payable
• Occupation of the property is determined by electoral role, school, place of worship, registration with a doctor, dentist, and involvement in the local community
• If you buy a property valued at over £500,000 in a company that is not rented out you will pay additional tax annually
• Do not buy a property that you are going to live in through a company
• Properties bought from the same person at different times are a linked transaction and  you will pay a higher rate of SDLT on the second property

 

BEST MOMENTS

‘The home you are going to live in should be in your own name’

‘If you are buying from the same person try and buy all the properties at the same time

 

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of

income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

•   Facebook
•   LinkedIn
•   Instagram
•   YouTube.

Shaz continues to share great advice about incorporating and explains what to do around personal loans and the best way to incorporate

Listen in and find out more

 

KEY TAKEAWAYS

• Under section 162 Incorporation tax relief you can move5 or more properties from your own name into the company when you incorporate
• If 2 or more people own the properties you can incorporate and not pay stamp duty land tax if you meet the criteria
• When you change the loan document details to the company no money is actually changing hands
• You can’t move properties individually it has to be all of them
• If you have property rental losses in your name don’t incorporate until you’ve used up the losses

 

BEST MOMENTS

‘You can’t move properties piecemeal it’s all or nothing

‘Most lenders will entertain it’

 

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of

income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

•   Facebook
•   LinkedIn
•   Instagram
•   YouTube.

Shaz explains the benefits of incorporating and why for properties owned it can bring an uplift in base value when you incorporate

This episode also includes questions and answers from those in the room with Shaz and these provide great information on specific examples that will be useful for listeners

 

KEY TAKEAWAYS

• If you are incorporating property into a limited company you will be liable for capital gains tax
• Section 162 incorporation relief states you don’t pay capital gains when you move your business  from being  unincorporated into a limited company
• If a partnership has owned property for a number of years there is
• There is no SDLT to pay when a partnership incorporates
• The benefit of incorporating is the uplift in the base cost of moving the properties from a partnership into a limited
• The longer you keep the properties the bigger the gain
• The funds belong to the company not the individuals

 

BEST MOMENTS

‘The longer you have owned the properties the bigger the benefit’

‘Section 24 is just a by-product, it’s the uplift that’s the greatest benefit’

 

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

• Facebook
• LinkedIn
• Instagram
• YouTube.

Shaz looks at company structure and the importance of having a structure that is flexible and works for you

There are a range of aspects you need to consider and this is a great opportunity to hear about a flexible company structure that can meet the needs of your business plan, objectives and make you tax efficient

 

KEY TAKEAWAYS

• The right business structure must be flexible and needs to be in line with your business plan and objectives
• Don’t just do something because it seems tax efficient do it because it works for you
• If you have project after project it can get very messy
• A holding company means you can lend and receive money from the other companies
• It’s easy to move money and you don’t need to keep the previous companies open
• Every company that's open will require tax returns and confirmation statements and this is an expense
• Keep the entities separate and limit liability

 

BEST MOMENTS

‘The right business structure must be flexible’

‘Once you’ve completed a project, it's good to close that company and move on’

‘You can keep recycling as you move forward’

 

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of

income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

• Facebook
• LinkedIn
• Instagram

 

Shaz explains the crucial details around money you take out from a company and how to do it in the right way along with informative content about tax and interest.

He also goes through the best way to loan money to your company and discusses the rate of interest you should be considering

This is a great episode packed with advice and information, listen in and learn more

 

KEY TAKEAWAYS

• If you borrow money from a company you will need to pay interest or file a P11D and pay tax
• If you owe the company money 9 months after the year-end you will pay 33.75% tax to HMRC as a Section 455 penalty tax
• You can borrow money as a one-off from the company but not repeatedly, which is known as bed and breakfasting
• If you are a basic rate taxpayer the first £1,000 of savings income is tax-free. If you are a higher rate taxpayer the first £500 in tax-free
• Loaning money to your company can be a higher risk so a higher rate of interest is justified
• With a limited company, you only pay tax on the income you draw down as you draw on it. As a sole trader or partnership, you pay tax on all of the profit every single year
• In a limited company you control how much you take out and when you take it out and have some control over the tax you pay

 

BEST MOMENTS

‘You can get to £27,570 without paying a single penny in tax’

‘ The company is a separate legal entity’

‘If you repay the loan you can claim back the money paid to HMRC’

 

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of

income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

•   Facebook
•   LinkedIn
•   Instagram
•   YouTube.

Shaz discusses the differences between various business structures and looks in detail at how a limited company operates

He answers questions from his audience and explains the importance of a shareholder’s agreement along with great advice on the detail of setting up and running a limited company

 

KEY TAKEAWAYS

• With a limited company, you have limited liability
• The bank wants a commitment from you about the deal and a personal guarantee is a way of doing this
• If you are a partnership the partners pay tax individually, If you have a limited company the company pays the tax
• Entrepreneurs’ relief is now business asset disposal relief and has a limit of 1 million
• If you sell your shares in the business and claim business asset disposal relief you will only pay 10% tax
• With a sole trader or partnership only you, your accountant, your bank and HMRC know what you are doing
• As a limited company, you have to follow the companies act and need to make sure you have a shareholder’s agreement

 

BEST MOMENTS

‘Try to limit the amount of your personal guarantee’

‘The management style is down to the directors’

‘A limited company is less flexible because you have to follow additional rules’

 

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of

income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

•   Facebook
•   LinkedIn
•   Instagram
•   YouTube.

 

 

 

 

 

 

Shaz answers questions on what linked transactions are and discusses with his live audience what makes a property habitable and uninhabitable for the purposes of mortgages and the threshold for stamp duty land tax

Listen in and hear great information and advice that will help you with when SDLT is applicable and when a linked transaction can be beneficial

 

KEY TAKEAWAYS

• Linked transactions are part of the same arrangement
• With a linked transaction you may end up paying more SDLT
• When there is no kitchen mortgage lenders will deem it uninhabitable
• The threshold for uninhabitable is different for SDLT, not having a kitchen does not alone make it uninhabitable
• A lack of roof, asbestos and no pipework are issues that make a property uninhabitable
• If it’s uninhabitable you will pay less SDLT

  

BEST MOMENTS

‘The threshold for SDLT is higher than the one for mortgages’

‘He ended up paying £90,000 instead of £221,000 in SDLT’

  

VALUABLE RESOURCES

[email protected]

 

ABOUT THE HOST

Shaz Nawaz is a serial entrepreneur; he owns five thriving businesses in diverse sectors.

Shaz is committed to helping business owners build successful businesses. Having conducted over 3,000 business growth consultations he has helped his clients generate millions in additional profits. His purpose is to inspire business owners to build businesses that are hugely profitable and sustainable.

He is a huge advocate of having multiple streams of

income. He has written a number of business books and regularly contributes articles to mainstream media outlets.

You can find Shaz on:

•   Facebook
•   LinkedIn
•   Instagram
•   YouTube.