My clients owns a number of residential properties which they let out. They have accumulated a rfeasonable amount of equity - enough to be concerned about inheritance tax.
For their next property they are proposing:-
Shares in an existing company - no other assets or trade - are issued to their children.
The thinking behind this is that future capital growth with be split four ways rather than two and the children will start to accumulate wealth.
Can the children own shares? If not is there any mileage in setting up a trust owning the shares?
Presumably the parents shares will not qualify for business property relief and hence the directors loan accounts (Total £200k introduced into company) will form part of the parents estates?
Any guidance would be appreciated.
Rob Vaughan
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Why a company?
It's late, and I may be missing something obvious but why a company? Residential properties may later be bought by people who want to live in them, and they're not going to want to buy a company. So you end up selling the property out of the company with a chargeable gain, and then dissolving the company with another capital gain. A trust owning the property looks a better idea.