Highlighted below are a few recent examples of the work carried out by our Hazlewoods Property team and savings achieved for our clients.
Property incorporation – finance cost restrictions
Background: We have recently been advising a number of property portfolio clients on restructuring their affairs to mitigate the finance cost restriction rules currently being phased in for landlords of buy-to-let companies. The rules operate to restrict relief for property finance costs to the basic rate of tax and are being phased in over four years, being fully operational by April 2020.
We assessed the impact of the new rules for one of our partnership clients and determined that they would face an increase in their tax liability of approximately £20,000 - £25,000 per annum.
How we helped: We assisted the client to incorporate their business and as part of the structuring, we obtained clearance that SDLT was not payable on transfer of the properties to the company. We also obtained a non-statutory clearance that CGT was not payable on the disposal by the partnership to the company and incorporation relief was available.
Further, whilst restructuring the business we also took the opportunity to implement some inheritance tax planning using growth shares to allow value to pass down to the next generation of our clients in a tax efficient manner.
Family Investment Company – Inheritance Tax planning
Background: A high net worth family with a portfolio of properties approached us to discuss the best holding structure for their property business to meet their future business and personal objectives. These objectives included further expansion of the business along with flexibility to pass down the business to their children in the future whilst ensuring that their tax liability was minimised as far as possible.
How we helped: We assisted the client with creating a family investment company to allow future growth in the business to be passed down a generation and save on inheritance tax. This included establishing trusts to hold shares for the children, whilst ensuring that immediate control in the business was retained by the parents. We also advised on the transfer of the properties into the company in a tax efficient manner, mitigating SDLT completely.
SDLT savings on incorporation
Background: We were approached for a second opinion on the SDLT implications of transferring a £6.5 million property held in a partnership to a company owned by the same partners. The (now) client had been told by their incumbent advisers that SDLT would apply on the transfer.
How we helped: We applied for and received clearance from HMRC that the transfer would not be subject to SDLT, which resulted in us saving the client £260,000 in SDLT that they would have otherwise paid.