Confirmation needed.. Divert rent through co.

Confirmation needed.. Divert rent through co.

Didn't find your answer?

This is quite important to him as he is a 40% tax payer!

The reason for license is that no SDLT payable. I have a pro forma license agreement ready.

Would it work? If not, what would?

The company is VAT reg'd but the rent is not VAT'd so this would stay the same in the company i.e. the rent and related exoenditure would not be vatable.

Please advise on this

Thanks.
Ian Barlow

Replies (2)

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By User deleted
20th Jun 2005 14:05

OK but
I think a lawyer needs to answer the licence question, but the capital tax on the gain would be worse under a company banner.

Upon sale, no CGT allowance is available to the company, and no taper relief for the company either.

Easier to raise any future finance in a personal ownership situation?

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By AnonymousUser
20th Jun 2005 15:09

For...
...the company to become the landlord and so be entitled to the rents:

- the freehold could be transferred to it;

- the existing lease could be assigned to it;

- possibly, but not sure about this, the company could be granted a new superior lease of greater length than, but subject to the burdens and benefits of, the old lease.

The first two options are clearly capital gains tax disposals and market value proceeeds would be imputed because the parties are related.

The Inland Revenue would likely take the same view of the third option, if it is actually possible.

Difficult to see how the company could be granted a licence of the property given that a lease already exists which gives the lessee exclusive right to occupy. Nor is it obvious why the company as licensee should be entitled to rents from the lessee.

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