Landlord Insurance for a Limited Company

understanding Landlord Insurance for a Limited Company

Not only can you find landlord insurance for a limited company, you can also learn about the rules of tax and what you get with a policy.

• With the change in the taxation rules for private landlords, more and more people are shifting towards being landlord through a limited company.
  
  
• The change is fairly simple: they create a Limited Company with themselves and then sell the property to themselves.
  
  
• This relieves them from the new tax rules which are making the lifes of private landlords just a little bit harder.

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Private Landlord vs. Limited Company Landlord

Landlord insurance for a limited company is not different per se from the landlord insurance for an individual, but the differences between those two types of tags for property owners, can have an effect on the insurance.

Here are some of the basic differences.

Taxes

Private landlords pay higher rates on the income from the property while limited company landlords pay only a 20% corporation tax and no tax on the income.

Property Types

The additional taxes and the whole income being taxable, make the cost of owning more properties a lot higher for a private landlord; in addition to this, we need to take into consideration the Stamp Duty Land Tax.

Limited company landlords can simply reinvest the income, which is not taxed, in new properties. They can also avoid the Stamp Duty Land Tax if they have a minimum of 15 properties and, being a limited company, they don’t have to achieve this completely on their own.

Landlord Responsibilities

In case of accidents, private means that responsibilities fall on the individual; limited company means that responsibilities fall on the company.

On the other hand, when it comes to declarations, limited companies have the responsibility of declaring everything, while privates can step back a bit more and only work with HMRC.

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Effects on Letting Insurance

Taxes

This doesn’t have a direct effect on the insurance, but it obviously affects the amounts that can be invested in the insurance. More on landlord tax.

Properties

This can affect the insurance for a limited company because of bulk insurances.

This depends on the sales department of the insurance company in question, but generally speaking a landlord purchasing insurance for multiple properties with the same insurance company is more likely to get a better deal.

Responsibilities

This difference is probably the one that has the most effect on the insurance.

1. As mentioned above, if an accident happens in a property owned by a limited company, the responsibility doesn’t fall directly on the landlord, but instead on the company.
   
   
2. This means the company has limited liability and the money involved in solving the accident won’t have to come directly out of the individual’s pocket.
   
   
3. This lessen the risks for the individual which in turn has more freedom in choosing less cover, especially in the liability part of the insurance, without risking much more.

On the other hand, focusing on the “legal expenses” part of the insurance, is very important for the limited company as, with all the paperwork involved, having the help of a specialist might come in handy.

So to sum everything up, landlord insurance for a limited company really isn’t a different kettle of fish from the landlord insurance for a private individual; what varies are the customization that the landlord of the limited company would do because of the differences between private and limited company.

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