Hybrid Tax Structure – Landlords BEWARE!

Hybrid Tax Structure – Landlords BEWARE!

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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.

http://www.legislation.gov.uk/ukpga/2009/10/schedule/25

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 those profiteering by promoting high risk schemes. Please share this article via Facebook, email, word of mouth, other social media networks and in any other way you can think of.

You may also be interested in THIS RELATED ARTICLE

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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.



Landlord incorporation and tax planning presentation

Landlord incorporation and tax planning presentation

Incorporation relief and latent gains explained

Incorporation relief and latent gains explained

Incorporating your property portfolio without having to refinance

Incorporating your property portfolio without having to refinance

Capital Account Restructure – Case Study

Capital Account Restructure – Case Study

Stamp Duty when transferring the ‘whole business’ of a Partnership into a Limited Company

Stamp Duty when transferring the ‘whole business’ of a Partnership into a Limited Company

Software to analyse the viability of transferring a property rental business into a Limited Company

Software to analyse the viability of transferring a property rental business into a Limited Company

Inheritance tax and legacy planning for property company owners

Inheritance tax and legacy planning for property company owners

HMRC Internal Manuals ‘Landlord Incorporation’

HMRC Internal Manuals ‘Landlord Incorporation’

On-demand webinar explaining the uses of Limited Liability Partnerships “LLP’s” for landlord tax planning

On-demand webinar explaining the uses of Limited Liability Partnerships “LLP’s” for landlord tax planning

Guide for landlords on forming an LLP for property investment

Guide for landlords on forming an LLP for property investment

LLP structure reduces landlords tax bill by 85% – CASE STUDY

LLP structure reduces landlords tax bill by 85% – CASE STUDY

Partnership taxation and associated rules

Partnership taxation and associated rules

Business continuity and succession planning for landlords

Business continuity and succession planning for landlords

Property valuations for tax planning purposes cost just £19.95 each

Property valuations for tax planning purposes cost just £19.95 each

Tax Planning Bodge Jobs – Limited Liability Partnerships “LLP’s”

Tax Planning Bodge Jobs – Limited Liability Partnerships “LLP’s”

Landlords Tax Planning Bodge Jobs – inter company lending

Landlords Tax Planning Bodge Jobs – inter company lending

A Landlord’s Tax Planning Disaster

A Landlord’s Tax Planning Disaster

Just say NO to tax avoidance “schemes”

Just say NO to tax avoidance “schemes”