The latest Liz Truss U-turn will mean landlords are burdened with a large rise in corporation tax from next April.

The announcement means that the tax will rise from its current 19 per cent to 25 per cent in just under six months time - a previous announcement by Truss had cancelled that rise.

This will represent a hefty additional tax on landlords who have already in recent years been hit by the three per cent stamp duty on additional properties, tax relief on mortgage interest payments being slashed to a flat rate of 20 per cent, and the removal of Wear and Tear allowance. 

While individual landlords are effectively taxed on turnover, company landlords are taxed on profit.  This has meant that for some landlords – particularly those who are higher rate taxpayers – it has become more profitable to move their buy to lets into a company … at least until now.

The higher corporation tax may well stop what had been a growing trend of landlords - especially those with four or more properties - incorporating for tax purposes.

Company structure consultancy GetGround said just last month that it had seen two-and-a-half times the number of incorporations in the year to the end of August than in the previous 12 month period. It had also recorded an average 11 per cent increase in incorporations completed month-on-month since January this year alone. 

Full article: https://www.landlordtoday.co.uk/breaking-news/2022/10/tax-bombshell-for-landlords-with-or-setting-up-companies#comments