It is much cheaper for sole owner landlords in Scotland to IncorporateMake Text Bigger
The Scottish equivalent to Stamp Duty “LBTT” is the same as in England and Wales. However, the 4% additional rate of LBTT in Scotland (1% higher than in England and Wales) does not apply when six or more connected transactions complete simultaneously. Such transactions also benefit from Multiple Dwelling Relief.
To illustrate this point, a sole owner landlord in Scotland who owns a rental property business comprising 20 properties worth £1,500,000 would only pay LBTT of £15,000 when transferring his property portfolio into a Limited company, whereas a landlord in England or Wales would pay three times more!
Just as partnerships in England and Wales benefit from advantageous SDLT relief upon incorporation of their business, there is also LBTT relief for property rental partnerships in Scotland. ‘Incorporation relief‘, which enables landlords to roll capital gains into shares in a company into which the whole of a property business is transferred, applies an an equal footing throughout the UK.
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There will never be an optimal ‘one-size-fits-all’ business structure for tax purposes. The presentation below provides a useful overview of some of the options you might like to discuss with us.