I have an Unencumbered property owned jointly between my wife and I. Its current market value is around £250K.
My plan is to gift this property to my LTD Co, Wife and I are directors my question is:
Is there a SDLT trigger?
Would I pay CGT at Market Value?
Thanks in advance
Mark
Replies (5)
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Yes and Yes. The SDLT is around £10,000. Any capital gain is potentially taxable at 28%. The combined rate (company and personal) of tax on the income is potentially 46%/56% (compared with 40%/45% if you do keep it personally).
Is there any reason for your seemingly random plan?
The one exception to the "doesn't normally apply" is where the donee is a company connected with the donor. FA 2003, section 53 deems the consideration to take place at market value.
The rules on transfers out of a partnership will override that, but you are a complete mug for not taking advice. You are likely to fall foul of the SDLT anti-avoidance provisions and you are already looking at a CGT liability that does not need to be crystallised.
Whatever you do, do not believe anybody who tells you that it is possible to avoid SDLT (or CGT for that matter) by firstly transferring your personally owned properties to an LLP and then on to a limited company. IT DOES NOT WORK!! Putting an LLP in between cannot make a difference.
They'll take fat fees off you for the privilege and will be nowhere to be seen when the whotsit hits the fan.