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Personal property > Ltd > Renter.

Is renting a personal property to my Ltd then to a renter Lawful?

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The aim is for the profit to land with my Ltd as oppose to me personally.

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By mtw88
15th Jun 2020 20:12

Yes fine.

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Replying to mtw88:
By Rweaver
15th Jun 2020 20:43

Why have you replied to your own question with an answer?

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Replying to Rweaver:
By Paul Crowley
19th Jun 2020 00:30

By Anonymous.
26th Mar 2020 20:31
Hi Anonymous. How's it going?

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By Anonymous.
15th Jun 2020 20:58

I'm not sure that the plan works assuming that you carry out the various transactions at arm's length. Could you perhaps illustrate with some figures?

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By Cheshire
15th Jun 2020 21:09

Try a legal forum.

The question you should ask is, is this a good idea from a tax perspective?

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By Paul Crowley
15th Jun 2020 21:17

Legal? yes.
Achieve the aim? no.

Your company and you are related parties. Market value of rent to company is easily measured by looking at rent to renter

Assumed looking to delay higher rate tax.

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Replying to Paul Crowley:
Hallerud at Easter
15th Jun 2020 22:53

To be fair I have done it with an entire block of flats, rented from a partnership that owned them to a limited, given the lease term (20 years) and the rent review mechanics it was fine, there was slack between the market rent for the whole and the individual rents the company could achieve, but the Limited had FRI responsibility, it had operating costs and business risk re voids.

In our case it was done for vat not income tax and the surplus the company made was not that high, but it is to a degree no different from the companies out there who say offer guaranteed rent to landlords and then relet and there will be a rent difference if the owner is guaranteed full occupancy, I just would not expect it to be that much.

From memory we charged something like £140k pa and the limited brought in circa £205k pa, but it did have costs to meet re letting fees/repairs/management, so not very lucrative. (But as I said, we did it to more avoid vat clawback)

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Replying to DJKL:
By ireallyshouldknowthisbut
16th Jun 2020 08:39

yes as DKL suggests, you can set it up. The key point really would be for the market rate of rent owner/company to be much lower than company/tennant. The only way of doing that in intersposing conditions such as long terms contracts between company & owner, tenant repairing lease etc. It may also work quite well if you do HMO's which is a "proper business" from an income/cost/risk POV.

That said despite all of the above, it would be generally not worth the faff for one or two let properties and quite frankly the 'tax savings' the OP imagines exist probably don't.

Its very much "horses for courses" on this type of thing.

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Replying to ireallyshouldknowthisbut:
By Tax Dragon
16th Jun 2020 08:44

ireallyshouldknowthisbut wrote:

the 'tax savings' the OP imagines exist probably don't.

The fact that it sounds like an existing company could mean that the overall tax increases (there's no knowing from the factuum).

HMRC must love DIY tax planners at times.

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By Justin Bryant
16th Jun 2020 15:38

This is nothing clever/new and is more or less like lending cash (interest free) to a company to earn income at lower CT rates. The only potential problem issue with land & buildings is s53 FA 2003 and linked transactions (if you do this successively). A licence to the company (to try avoid that SDLT problem) doesn't work legally.

You also need to consider potential CGT & IHT issues.

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