Change of Beneficial Ownership

by Milorodney

14:17 PM, 18th September 2018
About a month ago

Change of Beneficial Ownership

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Change of Beneficial Ownership

Hi All,

I am wondering if you can help.

I am looking into changing the beneficial ownership of my 3 BTL properties, all of which are mortgaged, and owned jointly as follows:

X2 Joint Tenants with my Father (He is a Nil – Scraper Basic Rate Tax Payer)
X1 Joint Tenants with my Wife (Nil Rate Tax)

Based on my employed income and forecasted share of dividends, company car tax and rental profits for this current 18/19 tax year, I will lose my personal allowance.

As such, a friend mentioned changing the beneficial ownership of the BTL’s to my Wife and Father, but to retain a 1% interest myself.

My questions therefore are:

• Are the any immediate tax issues such as SDLT or CGT
• If I am “assigning” the income, does that mean I am also assigning the capital value in the same proportion
• What happens in the event of death (my father is obviously older than me)
• What happens in the event of divorce
• Are there any other considerations that I need to be aware of

Thank you for you help.

Steve



Comments

Mark Alexander

14:24 PM, 18th September 2018
About a month ago

Hi Steve

In answer to your questions:-
 

Q) Are the any immediate tax issues such as SDLT or CGT?

A) Yes there are.

 
Q) If I am “assigning” the income, does that mean I am also assigning the capital value in the same proportion?

A) Yes it would

 
Q) What happens in the event of death (my father is obviously older than me)?

A) Beneficial interest transferred to your father would form part of his estate

 

Q) What happens in the event of divorce?

A) Unless the spouses can agree, the Courts will decide who gets what, regardless of the legal or beneficial ownership

 

Q) Are there any other considerations that I need to be aware of?

A) Yes, I think you should book a tax consultation. I cannot advise you at this stage as there is insufficient information. However, what you have described appears to be a classic reason for forming a Family Partnership, because that would entitle you to allocate partnership profits disproportionately to ownership. Please see the link below to book a Tax Consultation.

https://www.property118.com/book-a-consultation/

michael connors

9:09 AM, 19th September 2018
About a month ago

You mention family partnerships? Can you please give me more detail

Mark Alexander

10:43 AM, 19th September 2018
About a month ago

Reply to the comment left by michael connors at 19/09/2018 - 09:09
I can provide you with a link to an example. It isn't quite the same as your personal situation but it will provide you with an insight into what a tax planning consultation involves.

If you require bespoke tax planning which meets your personal circumstances please book a consultation.

Link to case study https://www.property118.com/three-dimensional-tax-planning-iht-benefits-case-study/

JB

12:05 PM, 19th September 2018
About a month ago

I can highly recommend a consultation with Mark. His knowledge is outstanding and you won't find a more genuine person. My tax savings from his advice more than paid for the consultation.

michael connors

12:53 PM, 19th September 2018
About a month ago

Reply to the comment left by JB at 19/09/2018 - 12:05
jb/mark,
Reading the example, Sounds like I have a lot to think about, all our properties are mortgaged , so each case is bespoke.
Thanks for the steer. MC

JB

16:01 PM, 19th September 2018
About a month ago

Reply to the comment left by michael connors at 19/09/2018 - 12:53
Most of mine are mortgaged too. I have formed a partnership with my 2 student (non /low tax paying) children with a plan to incorporate in 2020. It's useful to read and re-read the articles until you understand it fully. Mark takes you though what you need to do. It was all straightforward for me.

JB

16:02 PM, 19th September 2018
About a month ago

Most of mine are mortgaged too. I have formed a partnership with my 2 student (non /low tax paying) children with a plan to incorporate in 2020. It's useful to read and re-read the articles until you understand it fully. Mark takes you though what you need to do. It was all straightforward for me.

michael connors

16:20 PM, 19th September 2018
About a month ago

Not to sure about the incorporate bit, keep getting mixed messages how the HMRC view it.

Mark Alexander

17:34 PM, 19th September 2018
About a month ago

Reply to the comment left by michael connors at 19/09/2018 - 16:20
The most credible source of information in regards to incorporation of a rental property business is the HMRC website itself. Please see the link below. However, from what you have said, I don't think incorporation is likely to be a viable for the size of the rental portfolio you have described.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65700p

michael connors

19:28 PM, 19th September 2018
About a month ago

Not to sure how you made that assumption?

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