Hybrid Tax Structure – Landlords BEWARE!Make Text Bigger
The hybrid structure is nothing new. In simple terms it’s a partnership, whereby one or more of the partners is a Limited Company, plus in some instances an offshore pension trust structure such as a QNUPS.
However, the way the structure is currently being touted by one particular firm at all the big landlord shows as a ‘one-size-fits-all’ solution to the issues associated with finance cost relief could very easily result in people falling foul of HMRC’s “Transfer of Income Streams” legislation under The Finance Act 2009 schedule 25 – please see the link below.
To summarise the legislation; if you transfer part or all of an income stream without also proportionately transferring the underlying business assets any tax advantage can be negated, save for any reasonable consideration at market rates. For example, if a company is a member of the LLP it may charge up to 15% of gross rents for the management of the property portfolio, subject to that being the market rate and there being no other management company used of course.
Hopefully, this tutorial will help to alert the industry and deter those who may have otherwise been enticed by the Charlatans who are profiteering from this poor advice. Please share this article via Facebook, email, word of mouth, other social media networks and in any other way you can think of.
Landlord Tax Planning Consultancy is the core business activity of Property118 Limited (in association with Cotswold Barristers).
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.