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Sam, Accountant
Category: Tax
Satisfied Customers: 14164
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hi Sam. My company owns a property which has planning permission

Customer Question

Hi Sam. My company owns a property which has planning permission for conversion from an office to two flats. This is likely to generate a capital gain. The company was a trading company but can no longer be considered such according to my accountant because the bulk of its balance sheet assets comprise property. I want to transfer the shares in the company to my two sons for inheritance tax planning. Where this property is concerned, I can either establish a fair residual land value for the development and either a) sell the property to my sons, who will develop it, or b) leave the property in the company and transfer the shares at the net asset value including the residual land value of the property. I have concerns about double taxation. Can you suggest the best way to proceed?
Submitted: 4 years ago.
Category: Tax
Expert:  Sam replied 4 years ago.



Thanks for your question and asking for me.


If you transfer the shares to your sons, this will create a capital gain 9although entrepreneurs relief may well be available ( thereby allowing just a 10% charge) but you then also incur a capital gain (through the tax remit of corporation tax) once the developed flats are sold so yes, you create a double tax position.

If, however you sell the property to your sons, then you will just have the one charge within corporation tax, but then your sons will also have a charge when the properties are sold, so it does not change the tax position, but just on whom the liability arises, and when that liability arises.

Its unlikely that you will benefit from entrepreneurs relief or any other business asset relief as it does not seem as if the property was used to trade in, within the business itself.


But I would get your accountant to provide you with a calculation for each (as he will have more in depth information such as profits for the company, and the future of the limited company, if its only assets and possibly trade is property, and at what rate corporation tax is due the you at least have hard figures

1) with it all falling on you/the limited company OR spreading the load

2) between the company and your sons


Do feel free to ask any follow up questions






Customer: replied 4 years ago.

Many thanks



Expert:  Sam replied 4 years ago.

HI Alan


You are very welcome and good luck - at least this will enable you to find the most tax efficient way of proceeding