**How can I grow my wealth tax efficiently and sustainably?**

Kathy is an independent estate agent who is keen to grow her wealth whilst she develops her property lettings business. Kathy is considering purchasing a rental property and reinvesting the rental properties to buy more properties in the future. Kathy is also considering make long-term investments in shares and enjoy the profits to boost her income.

Kathy the landlord

So thinking of Kathy as a property investor, although she would not pay national insurance on any rental profits she makes she would still have to pay corporation tax if she buys an investment property via her existing limited company. Worse still, if she decides to buy rental properties personally she could be subject to high income tax charges on the profit she makes.

So certainly some tax considerations for Kathy if she plans to go down the property investment route but c tax planning could be done to mitigate her tax position if advice is taken in the early stages of her planning.

But are there any other options for Kathy to consider that are tax free?

How can I grow my wealth tax efficiently?

The alternative could be investing in shares on the stock market.

If Kathy invested in shares via her pension or an ISA she would have no tax to pay on any profits she makes.

Looking at the numbers , if Kathy made £10,000 of profit in rental income in a given tax year, 19% of her profits would go to corporation tax if the property was purchased via the limited company . If the property is bought personally under Kathy’s name, she could face up to 40% of personal income tax liability or 40% cut to her profits.

Contrast that £10,000 profit in dividends or interest payments Kathy makes from share investments in her pension or ISA, she would be able to keep all the profit all to herself.

Understanding your tax position

There are also many other tax free savings available according to your circumstances. Be in the know and contact us for a complimentary consultation.

Mirandus are chartered tax and chartered accountants, supporting individuals and small businesses across the UK, helping you grow your business and wealth sustainably and tax efficiently.

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