£5.3 million tax planning success

by Mark Alexander

9 months ago

£5.3 million tax planning success

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£5.3 million tax planning success

This week we obtained approval for a £5.3 million bridging facility to allow a client to withdraw their partnership capital up to base cost from their property rental business pre-incorporation.

The facility will transfer to the company on incorporation but the partners will retain the cash.

They will then loan the cash to the company to create a £5.3 million directors loan.

The company will then pay off the bridging finance.

OUTCOME

The company will repay the Directors out of future company profits without any personal tax consequences for the Directors.

The finance was provided at a very competitive rate by a private funder and was secured against solicitors undertakings. This meant that property was not required as security to support the funding, which also kept costs down.

We’re happy, our clients are VERY happy.

It could be you!

The key criteria in regards to whether the above structure could also apply to you is:-

  • You spend at least 20 hours a week running your property rental portfolio business
  • You are not the sole owner of the business
  • You haven’t borrowed more than the purchase price of your entire property portfolio
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Consultations include new client compliance checks, fact find via email with complimentary software, expert analysis, a detailed written report and recommendations and a 30 minute Q&A session via Skype or telephone. We GUARANTEE total satisfaction or a full refund.
  • Please provide an overview of your circumstances and what you are looking to achieve.
  • If you have a spreadsheet with details of your properties please upload it here.
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Comments

Mark Alexander

9 months ago

A few technical points for accountants reading this who may wish to refer similar cases to us.

"TCGA92/S162 applies where a person other than a company transfers a business as a going concern with the whole of its assets (or the whole of its assets other than cash) to a company wholly or partly in exchange for shares. Provided that various conditions are satisfied, see CG65710, the charge to CGT on the whole or part of the gains will be postponed until such time as the person transferring the business disposes of the shares.

The way the relief works in practice is that all or part of the gains arising on the disposals of the assets are ‘rolled over’ against the cost of the shares.

Relief under TCGA92/S162 is sometimes referred to as ‘incorporation relief’.

A claim is not required because the relief is automatic. However, the person transferring the business can make an election under TCGA92/S162A to prevent relief under TCGA92/S162 from applying, see CG65730."

Source: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65700


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16.9% gross yearly ROI predicted on this development in Leeds