Red Hot Tax Tip – get tax relief on your personal mortgage

EXAMPLE

You sell shares in your family company to your spouse for an amount equivalent to your personal mortgage, or more if additional capital raising is required.

Your spouse borrows to pay for the shares – e.g. remortgage or raised against the security of a buy to let or commercial property.

You use the funds to clear your personal mortgage.

Tax relief is then claimable by your spouse on the new loan as it was used to purchase an interest in a close company.

Conditions are that your spouse either (a) owns more than 5% of the issued ordinary share capital, or (b) owns some of the share capital and works for the greater part of his/her time in the management or conduct of the company.

No capital gains tax is due on the share sale as the sale is between spouses.

Stamp duty is payable at a rate of 0.5%