Starting a buy-to-let (BTL) property business in the UK is an attractive way for many investors to build wealth through rental income and property appreciation. One of the most effective ways to do this is by setting up a company, rather than purchasing properties in your personal name. A Buy-to-Let (BTL) company offers various tax advantages and can make it easier to manage multiple properties.
With this step-by-step guide you can navigate the company registration process, which is often the preferred structure for its liability protections and tax benefits.
Step 1: Choose a Company Name
Your BTL company must have a unique name. The name should not be identical or too similar to another existing company and it must not be offensive or misleading.
- Check availability: You can search this through the name checking tools throughout our website to ensure that your chosen name isn’t already taken.
- Consider your brand: While it’s not strictly necessary, many property investors choose a name that reflects their business or brand, especially if they plan on scaling their portfolio.
Step 2: Determine the Company Structure
- Shareholders: Who will own shares in the company? The shareholders are very important people as they own the business. At the minimum you must have one shareholder to form a Ltd company.
- Directors: At least one director must be appointed. Companies House will need their details.
- Company Secretary: (Optional) If appointed, they must be at least 16 years old. A Company secretary can always be added at a later date.
Step 3: Prepare Your Company Documents
- Memorandum of Association: This document is a legal statement signed by all initial shareholders or guarantors agreeing to form the company and take at least one share each. Using our service we prepare this electronically on your behalf and submit this to Companies House on your behalf.
- Articles of Association: Defines how your company will run. The written rules about running the company are agreed by the shareholders or guarantors directors and the company secretary. Most companies use the “model articles” described in the Companies Act. Using our service we will prepare this document for you and send this to Companies House.
Step 4: Register Your Company
- Online Registration: The best method is using our Company Formation service or the more complicated Companies House service.
- Documents: Submit the Memorandum and Articles of Association.
- Information: Provide details like company name, registered office address, SIC code (Standard Industrial Classification), director(s) details, PSC (Person with Significant Control) details and shareholder information.
- Fee: There’s a government fee for registration, currently £50 for an online application.
- Post: If you prefer, you can complete a paper application (form IN01) and send the documents by post, but this takes a lot longer.
Step 5: Get Your Company Number and Certificate
- Upon successful registration, Companies House will issue:
- Company Number: A personal identifier for your business.
- Certificate of Incorporation: This is your legal proof of being a limited company. A bit like a birth certificate of your company!
Step 6: Registering for Corporation Tax
- HMRC: HM Revenue & Customs will obtain your registration details from Companies House and will send a letter around 2-3 weeks after your company is registered.
- This is actually a notice to file a CT600 corporation tax return.
When you register with us we provide full guidance on how to do it.
Step 7: Set Up PAYE if Employing Staff
If your company will employ staff, you must register for PAYE (Pay As You Earn). This handles income tax and National Insurance contributions for your employees.
LaunchList® has detailed videos to help show you how to do this yourself.
Or you can request our help!
Step 8: Consider VAT Registration
- Turnover: If your expected turnover exceeds £90,000 per year, you must register for VAT. Otherwise, voluntary registration can be beneficial for reclaiming VAT on purchases.
- LaunchList® has detailed tutorials with lots of info showing you how to register for VAT yourself, or you can request our help.
Step 10: Business Insurance
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- Public Liability: Essential for to cover potential damage or injury. So if you’re sued for damage to someone else’s property, or injury to your tenants as a result of your rental property, you’re covered.
- Employer’s Liability: If you have employees, this insurance is legally required.
- Building Insurance and Contents Cover
Step 11: Comply with Industry Regulations
- You’ll need to follow national and local landlord regulations. If your property is a home in multiple occupancy (HMO), you’ll need to get an HMO license from your council. Local authorities also sometimes have something called “additional and selective licensing,” which your property could fall under (even if it’s not an HMO), so check your local council’s website to see if they ask for extra licensing.
- Gas and electrical regulations must be adhered to and certificates kept up to date.
Step 12: Regular Compliance
- Annual Confirmation Statement: File this annually to update company details with Companies House.
- Accounts: File annual accounts, including income, expenses and property maintenance costs. Dormant companies have simpler requirements.
LaunchList® contains self-help tutorials to show you how to manage filing your confirmation statement.
You can reach out to us for extra support and for accountancy recommendations via the MYCW client dashboard.
Step 13: Registering a Domain Name and Obtaining an Email Address
In today’s digital age, an online presence is crucial for any business, including construction companies. After setting up your legal entity:
- Domain Name: Choose a domain name that reflects your business identity. It’s often beneficial to align it closely with your company name for brand consistency. Use our domain registration service.
Use our domain name search tool to find available names for your business.Protect your Company Domain Name
- Email Address: Once you have your domain, set up a professional email address. We have “no technical skills required” email setup to allow you to create email addresses like info@yourbuytoletcompany.co.uk. This not only looks professional but also helps in keeping business communications separate from personal emails.
Forming a buy-to-let company in the UK can offer significant financial and tax benefits, but it also comes with responsibilities and costs. By following the steps outlined in this guide, you can set up a limited company that enables you to grow your property portfolio while taking advantage of the protection and tax efficiencies that a corporate structure provides.
As with any business venture, it’s advisable to seek professional advice from accountants, solicitors, and mortgage brokers to ensure that your buy-to-let company is set up properly and in compliance with UK law. With the right planning and strategy, your BTL company can be a lucrative investment for years to come.
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