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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4199
Experience:  FCCA FCMA CGMA ACIS
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Im considering transferring my 5 buy to let properties into

Customer Question

im considering transferring my 5 buy to let properties into a ltd co to mitigate IHT. There is just myself and my daughter and we would be the shareholders
My income for tax purposes is around 50k PA, so over the 28% CGT threshold.
There would be a liability of CGT (28%) combined with Stamp Duty to sell the properties to the companies of £130,300.
However as I manage my own rental business I may qualify for Incorporation Relief (landmark ruling by the Upper Tier Tax Tribunal -Elizabeth Moyne Ramsey v HMRC [2013] UKUT 266 TC), it was determined that in certain circumstances the landlord could claim incorporation relief under s162 Taxation and Chargeable Gains Act 1992 thereby deferring any tax until such time as the property is sold by the acquiring company.
I would like to know
1. the pros and cons of transferring my properties into the business (particularly any financial implications)
2.whether it is possible to do this piecemeal to make it more affordable
3. How I can check whether I will be given Incorporation Relief
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
You appear to have grasped the essential financial complications, the deferral of CGT to some indefinite future date through Incorporation Relief (IR). Using a limited company places a buffer between you and the business activity which is undertaken by the company, not you. This could protect your personal assets should something catastrophic happen to the enterprise. Remember everyone thought the Titanic was unsinkable!
It is perfectly possible to make these changes over time as financial resources permit.
The quickest way to determine an entitlement to IR would be to ask your tax office. You could also try your local inquiry office. These are certainly available in Scotland although I understand that they are rather thin on the ground in your neck of the woods.
I do hope that I have given you some food for thought in these matters.