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Joshua, Lawyer
Category: Property Law
Satisfied Customers: 26070
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I own a small property company that I wish to leave to my children.

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I own a small property company that I wish to leave to my children. The business consists of just two flats that are rented to tenants. Do I need to do anything other than to put in my will that I am leaving it to them?
Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience. May I confirm whether the flats are owned by a limited company that you in turn control or whether the flats are owned directly in your name please?
Customer: replied 3 years ago.

Owned by the limited company which I control, although my son sometimes helps with the work involved e.g. repairs and dealing with tenants. I do not use an agent to manage the properties and usually find the tenants myself too.

Thank you. If you wish to make a gift of the company to your children but not during your life but rather only after your death, as you suggest, this would be accomplished by including a provision to that effect in your will.If your children are already your residuary beneficiaries in your will - i.e. the beneficiaries that are entitled to the residue of your estate after any specific gifts, tax and debts that may be due are paid, you do not need to include specific provision leaving your company to them because they would inherit the company under the gift you have made them of your estate residue providing there is no provision gifting the company to somebody else.If however your children are not your residuary beneficiaries or for any other reason you wish to include a specific provision in your will leaving the company to them, then you simply include a provision that provides that you leave all your interest in [Name Company] Ltd [Company No.] to your children and if more than one in equal shares.such a clause provides that your company will be left to your children living at your death in equal shares. I hope the above is of assistance? If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today or just reply back to let me know if the above is helpful. Your feedback is important to me. If there is anything else I can help with please reply back to me.
Customer: replied 3 years ago.

Will my children have to pay capital gains tax on the properties, or can they just continue to run the business in the same way that I have done?

If they do not pay the capital gains tax at this time, will IHT be higher as a result? Will CGT be exactly the same if they sell the flats later on?

No there won't be CGT because the company owns the properties and this will remain the case after your death so there is no transfer of the properties on which CGT is assessed. However the value of the company will be included in the value of your estate and there may be inheritance tax to pay on your estate of it exceeds the nil rate band allowance in force at the time of your death. Does the above answer all your questions or is there anything I can clarify or help you with any further?
Customer: replied 3 years ago.

It seems to me that if they sell the flats and pay the CGT, IHT will be lower. So unless they want to keep the flats for ever, it is better to sell. Am I right?

If the properties are owned by your limited company, limited companies do not pay capital gains tax. Rather it pays corporation tax on profits on sale. But otherwise yes you could seek to reduce inheritance tax if your estate is likely to be over the inheritance tax threshold by either gifting away assets for your death, gifting away income or using trusts. Avoiding inheritance tax is possible but not straightforward and an appointment with a private client lawyer would be necessary to fully discuss your options as most options tend to have pros and cons which you must consider carefully in your own circumstancesHave I been able to help you with all your questions on the above?
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