I have a client who holds three buy to let properties worh around £10m in total, two in a partnership with his family and one personally. He has substantial borrowing against the properties and is worried about the impact of HMRC restricting loan interest relief. He also wants to reduce his likely IHT bill.
One option is to incorporate the business to be able to preserve full interest relief for the borrowings. Rollover relief could be claimed for CGT. But no BPR will be available for the shares on death unless the company is converted into one which is not an investment company, eg a property development company.
Alternatively he could transfer the properties into trust, and providing he survives 7 years and the trust is structured correctly then there will be cgt holdover relief on transfer into trust and the properties will fall out of his estate for IHT purposes.
But what if we take this one step further and he incorporates the property letting business into a company before he transfers the shares into trust? Is there any advantage/disadvantage in this (apart from the availability of claiming full tax relief on the interest vs extracting the profits and the usual Company Tax admin nightmare). I only usually deal with personal tax not corporation tax so would welcome advice.
Thanks in advance