Corporation tax on rental income

Dear sir/madam, I do hope you are all well! I currently have a portfolio of rental properties through a limited company. I’m looking to draw income/salary from the rental profits. Can you confirm what percentage of tax will need to be paid please? I believe if you have rental properties outside of a limited company tax’s are 20%, 40% or 45% however if the properties are in a limited company the tax you would pay to receive a rental income/salary would be 19%~25% is this correct? Many thanks for your assistance on this!

Hi ,
 

The rates of tax for a company and individual are indeed different. As you've pointed out a company will pay between 19 to 25 percent depending on total amount of profit whereas an individual will pay tax dependent on whichever tax bracket they may fall into. Ultimately, the company will always pay a minimum of 19% on any profits through the limited company. With regards to taking a traditional salary this would go through the usual PAYE system and naturally fall to income tax rates which you mentioned previously. There are other methods of receiving income from a company such as dividends but these too are subject to tax rates which also must be accounted for when making a decision.  Thank you .

Not HMRC...also, if you have a "portfolio"in the company Im guessing the value will make you liable to AETD (search it online) on an annual basis (IN ADDITION) to corporation tax...so you will have corporation tax on company profits (19-25%), PAYE on any salary (personal allowance then 20%, 40% and 45%), tax on dividends 8.75%, 33.75% and 39.35% (not allowable against corporation tax as a deduction) and also AETD annually. If you need to do a AETD return and havent done it yet you need to do promptly...its due by the end of the month

Thank you for your responses! Just to be clear then, if I was to take a salary from the rental income this would fall under the 20% 40% or 45% tax bracket?

Correct, company would pay corporation tax on profit after salary costs deducted (allowable), you would pay tax on the salary after pesonal allowance (assuming no other income) at 20/40/45. Please also note, the company will have an employers ni charge on salary, and you will have an employee charge to ni on salary (different amounts, different thresholds).

Hi Marco,
If you are taking a director's salary then the usual income tax brackets would apply with the percentage naturally depending on your personal circumstances. 
Thank you.