We are setting up our family business as an LLP to bring me and my sibling in (was previously a normal partnership between my parents) and trying to decide if we include the land and property the business is run from in the LLP or not (or continues to remain part of my parents assets and excluded).
We would like to understand the financial implication of both scenarios:
The company's Land and building is worth approx. £170K (split between 50/50 between me and my sibling on inheritance).
Other assets we would inherit outside of this would be:
i) my parents share in the company
ii) my parents are currently living in rented accommodation but expect to purchase a house approx. £400 – 450K this year (would again be split 50/50 between me and my sibling on inheritance).
Therefore max. value of fixed assets split between both should be within the £325k inheritance tax threshold per person (we’re aware the fixed assets could appreciate over time & thresholds could change).
If the land and property of the company remained owned by my parents rather than in the LLP it would then be ring-fenced from the LLP and provide a guaranteed income/ pension to them, regardless of the future success of the company as property could be rented out (although the expectation is for the company to continue as a going concern).
1) Is there any CGT (or any other tax) implications of the land and buildings coming into the LLP, or later if we need to sell the property/ land compared to if it was kept outside & just owned by my parents. Or any implications to when my parents pass away? Would we be worse off by doing this?
2) If it is included in the LLP can the land and property (benefits/ entitlement) be split 50/50 between my parents only in the LLP agreement (until we inherit their share at a later date)? Is there any tax implications to doing this? We are trying to ascertain if it is better to include or exclude the property from the LLP or not.