There were plans to change Pensions and make them like ISA’s where the tax relief comes at the end not the beginning but fortunately George Osborne changed his mind. Let’s hope he leaves pensions alone! Here are some of the benefits:
The key problem area is that Property Investment is generally not considered to be a Trade.
Some of the issues were resolved in EM Ramsay v HMRC  UKUT 0226 (TCC)
Mrs Ramsey carried out the following activities
This work equated to at least 20 hours per week and Mrs Ramsey had no other employment.
It is because she did the work herself that her property investment was considered a ‘Business’ and eligible for Incorporation Tax Relief.
There are many reasons why residential property investors are now rushing to incorporate, the biggest reason being the Restriction of Mortgage Interest Tax Relief.
The Finance Bill set out plans to restrict individuals on claiming mortgage interest as a cost against their property investment income, for individuals the restrictions are phased in from April 2017.
For a 20% tax payer that’s fine but for a higher rate taxpayer it’s a disaster that will lead to them paying a lot more tax.
When you sell or give a residential property to your Company you will incur Capital Gains Tax if you make a gain, it’s for this reason many investors and their advisers believe that they are ‘automatically’ entitled to claim Incorporation Tax Relief, but in many cases Incorporation Tax Relief will NOT be available!
The tidal wave of small businesses going through Workplace Pensions has now started with the peak being in 2016/17.
So what do you need to do before you stage?
From April 2016 the employment allowance is being increased by £1000 to £3000. Eligible business and charities will be able to claim a greater reduction on their employer NICs liability.
However to ensure that the NICs employment allowance is focused on businesses and charities that support employment, from April 2016, companies where the director is the sole employee will no longer be able to claim the employment allowance. If a company has an employees other than directors, who earn above the lower earnings limit (£5824 for 2016-17), then the £3000 employment allowance would be available.