Foreign Property

Foreign Property

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Client has existing businesses in the UK which are profitable and has now buying a property in Spain

He wants his UK business to buy it through it's general borrowing and charge the interest against taxable profits. The property itself would not be let out and only used for directors and families

Question is what HMRC's position would be about that in respect of

1. Corp Tax as effectively the interest would be charged against Sch D profits
2. I assume benefit in kind would still be payable as the business has other activities - based on annual value

AC

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By User deleted
25th Feb 2009 17:43

BIK
The Spanish property would be a benefit on the directors based on the cost of the property plus the annual value assuming it costs more than 75k. The BIK is normally charged on actual use where there are multiple people that can use the property, but if the directors are related this may not be the cased. See EIM11406. The interest deduction is not actually against the Schedule D1 profit, it is a non-trade loan relationship debit.

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