I was wondering if anyone could help me out here as I am very confused with what I keep reading and hearing about the limited company being the best way forward from most buy to let property investors.
I am very confused to the calculation being given and I am wondering if I am missing something here as I understand it corporation tax Is at 19% or 17% therefore it is clear that when the company profits it is charged either one of these figures and for this purpose I will go with the lowest percentage of 17% to be in the favour of people claiming the limited company is the best way forward.
The major bit that’s confusing me is that people keep stating that it is clearly a cheaper tax as your personal tax sits at a minimum of 20% So surely the company gets taxed 17% and then when you want the money in your pocket you would then need to pay yourself as a sole director monies which are further taxable at no less than 20% for instance and this calculation would calculate at 37% tax at a bare minimum?
I don’t hear many people talking about the fact that they still need to draw money out of the limited company after the limited company has paid corporation tax I only hear the first part of what corporation tax is compared to purchasing properties in your own name for instance yet surely this is only part of the calculation and therefore surely this is completely misleading is it not?
Maybe I’ve got this all wrong I would love for somebody in the know to be able to correct my calculation or to be able to elaborate further on what I have not understood?
Thanks