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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4414
Experience:  FCCA FCMA CGMA ACIS
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Tony, We have an IOM Company which owns a car showroom

Customer Question

Hi Tony,
We have an IOM Company which owns a car showroom in the UK and this rented out. This is a lifestyle business so in effect all the rent comes out as our income as we are retired here in IOM. We also privately own an industrial unit in the iom. This is not rented out.
We would like to help with grandchildren school fees so my thoughts are if we give the industrial unit to them and then have the company pay rent directly to them for the unit. In order to get a connection between the company and its need for the unit , we would think about giving say some classic cars or bikes to the company (with an IOU back to us) so the company would be obliged to pay to rent the items.
If I am correct in my thinking, the rent for the unit would then be an expense before uK tax thus saving us there and then the income to my grandchildren would be exempt from tax as they would each qualify for the 10K approx tax free allowance. Therefore ineffect, their school fees are being paid tax free and also the rent for the unit would be tax deductable.
what do you think ?
thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer and pleased to be able to help you with your question. Paying school fees is a benefit in kind and taxable against the relevant children. Providing it does not exceed the individuals' personal allowance, currently 10.6K, then no Income tax liability would be incurred. The company would report such benefits on a form 11D at the conclusion of each tax year. The rent for the unit is allowable against Corporation Tax (CT) as indeed would the benefits in kind distributed to the children. I do hope my reply has been of assistance.
Customer: replied 2 years ago.
That's great, Many thanks .
Customer: replied 2 years ago.
Just lastly , can you see a problem by selling the classic cars to the business so it has to accommodate them by means of renting the unit from our grandchildren. Our thoughts were, we can advertise the cars for use with tv, film etc etc so it could be justifiable?.
Expert:  bigduckontax replied 2 years ago.
Seems a perfectly acceptable business proposition.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.