Summer Budget 2015 – Landlords Reactions

So you loan your kids a £100,000 (which they use a deposit to buy a house and rent out) they start a property management company (of which you have no connection) which juices a good portion of the profit from your property rental business, they keep property management turn over limits below VAT threshold (the limits have nothing to do with the rent roll they manage, just the extra bit on top)
they make a profit and pay the tax and pay you back monthly some of the £100,00 that you loaned them. Don’t give your kids an inheritance anymore, make sure that you give it them as a loan.

Reply to the comment left by “Chris Cooper” at “21/02/2016 – 12:03“:

IR 35 only applies if you are working for a third party client, who are paying a Ltd Co of which you are a majority shareholder, and HMRC thinks you are really an employee of the client. Then you are liable for PAYE and NI on 95% of your turnover/sales.

If you are self-employed and working for a third party, the third party is liable for your PAYE and NI if HMRC think you are actually an employee. If it’s “your own” Ltd Co, I don’t see that either would apply, esp if the Ltd Co employs others.

You could set up the ltd company with directors who arnt on the mortgages ie partner etc

Reply to the comment left by “Kathy Evans” at “21/02/2016 – 17:13“:

Hi Kathy – maybe it’s covered by Managed Service Corporations (MSC)?http://www.hmrc.gov.uk/manuals/esmmanual/ESM3500.htm

As any self managing landlord can delegate all or part of that function at any time and to any entity of their choice I don’t see that.

“Potentially” HMRC might be the winner if you pitched salaries at a high level with NI to boot or they might gain less with a different remuneration structure.

And there’s expenses you can’t charge yourself rent for a desk in your living room (some accoodation costsxexcepted) but you most certainly can charge your limited company for the use of a converted garage(steer clear of CGT implications).

This video is a broadcast by Channel 4 News from July last year, concerning property-related corporate tax avoidance, Denning Mews and George Osborne.

https://youtu.be/th66Ae6IYa4

Please kindly watch the video and share it as far as you are able.

Reply to the comment left by “Chris Cooper” at “21/02/2016 – 17:47“:

Don’t think it’s that one either – that’s for “umbrella companies” body-shopping workers to third parties (when HMRC thinks the worker should be an employee), generally the workers are made temp directors or shareholders of the umbrella co. I don’t think it applies if a Ltd Co is not selling “employees” to clients and paying the worker more than 50% of the money the client is paying for the services.

Reply to the comment left by “Gareth Wilson” at “21/02/2016 – 18:36“:

Perhaps we should all be using Sir Peter Osborne as a tax [avoidance] advisor?

Entrepreneurs Relief does not apply to BTL, nor investments generally. But the line between an ‘investment’ and running the ‘business’ is a grey area, running a portfolio ranges from one to the other.

Running the ‘Services’ side of letting, RtR checks, legionella checks etc are all important legal parts of a business. Perhaps diversifying suitable properties into Serviced Accomodation / offices, Airbnb, holiday lets, mixed commercial / residential properties might qualify. Anyone considered doing this?

If a business is saleable (as an SPV.) might be suitable for E R? Having just benefitted from this in an unconnected business, the tax SAVED alone bought me a set of revenue earning flats.

Hmrc’s rules state:
https://www.gov.uk/entrepreneurs-relief/eligibility

Eligibility
You may be able to pay less Capital Gains Tax when you sell (or ‘dispose of’) all or part of your business.

Entrepreneurs’ Relief means you’ll pay tax at 10% on gains on qualifying assets (instead of the normal rate of 18% or 28%).

Work out if you qualify
You’ll qualify if you dispose of any of the following:

all or part of your business as a sole trader or business partner – including the business’s assets after it closed
shares or securities in a company where you have at least 5% of shares and voting rights (known as a ‘personal company’)
shares you got through an Enterprise Management Incentive (EMI) scheme after 5 April 2013
assets you lent to your business or personal company
You may also qualify if you’re a trustee selling assets held in the trust.

If you’re selling all or part of your business

Both the following must apply:

you’re a sole trader or business partner
you’ve owned the business for at least one year before the date you sell it
The same conditions apply if you’re closing your business instead. You must also dispose of your business assets within 3 years to qualify for relief.

If you’re selling shares or securities

Both the following must apply for at least one year before you sell your shares:

you’re an employee or office holder of the company (or one in the same group)
the company’s main activities are in trading (rather than non-trading activities like investment) – or it’s the holding company of a trading group
Either of the following must also apply for at least one year before you sell your shares:

you have at least 5% of shares and voting rights in the company – if they’re not EMI shares
you were given the option to buy them at least one year before you’re selling them – if they’re EMI shares
If the company stops being a trading company, you can still qualify for relief if you sell your shares within 3 years.

If you’re selling assets you lent to the business

Both the following must apply:

you’ve sold at least 5% of your part of a business partnership or your shares in a personal company
you owned the assets but let your business partnership or personal company use them for at least one year up to the date you sold your business or shares – or the date the business closed

If all your gains qualify for Entrepreneurs’ Relief
Work out the gain for all qualifying assets.
Add together the gains (and deduct qualifying losses) to work out the total taxable gain that’s eligible for Entrepreneurs’ Relief.
Deduct your tax-free allowance.
You’ll pay 10% tax on what’s left.”

With the new stamp duty legislation transferring all your properties will incur stamp duty on each one will it not ?

https://www.landlordtoday.co.uk/breaking-news/2016/2/incorporating-doesnt-stack-up-for-majority-of-landlords-says-nla