Property to Ltd Co or LLP?

Property to Ltd Co or LLP?

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Husband and wife in their mid 60s have 3 BTL properties which they own jointly which they wish to gift to a newly formed limited company in which Mrs will own 55% and their 2 adult children the remainder.  They have been contemplating this for some time and do not wish to look at trusts at all.  They manage the properties i.e. interview tenants, collect rent and organise repairs etc.  Husband will not have shares in the company but may continue do some work on managing the properties.

Properties are heavy with gains so s162 TCGA 1992 would be most useful following UTT ruling in Ramsay but their scenario does not meet on all fours so don't think this is an option?

Staggering gift of properties over this and next tax year helps a little.  s260 is not an option as no trust and don't think they will budge.

IHT is problematic for husband as gift to company is CLT and so NRB is then largely used up and if he were to die within 7 years he has paid CGT with no relief other than his estate has gone down as a result of CGT? Little change to wife's IHT position. 

SDLT will need be considered but any thoughts?

Overall Ltd Co does not look like a great move so perhaps LLP would be a useful alternative?  CGT neutral if husband and wife transfer to their LLP?  Presumably husband could then reduce his share in favour of the children over time with CGT on him? Although maybe linked transactions s19 TCGA 1992?

Any answers to the above questions would be much appreciated.

Replies (4)

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By MBK
25th Mar 2014 13:44

The only suggestion I have ...

.... is go to someone like Gabelle for paid advice.

This is much too complex a question for A Web.

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By jon_griffey
25th Mar 2014 13:49

Or...

Send in a question to reader's forum in Taxation magazine.  They are always crying out for new queries.  I have had quite a few published.  Trouble is the responses often give confilcting views.

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Rachel Davies
By Rachel Davies
25th Mar 2014 13:56

Agreed, needs more info as well e.g.what are they trying to acheive, is it IHT related or income related, what values are we talking about etc? It needs looking at as part of the bigger picture to ensure all angles are covered and that what works from a tax perspective for one aspect doesn't scupper something else. Based on the info here the only answer I could give would start with "it depends...."....

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By Justin Bryant
01st Apr 2014 18:40

I could advise on this

In a way that avoids/minimizes SDLT, CGT, IHT and income tax. If you want to get in touch, my contact details are in this link:

ated.co.uk

 

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