How Should You Own Your Business Premises?
There are various tax implications ...
POSTED BY HELEN BEAUMONT ON 24/04/2019 @ 8:00AM
Many businesses own the premises they operate from, but from a taxation point of view, sometimes it's efficient for the business not to own it. There are ways this can be achieved ...
You may own your business premises, but what if your potential buyer doesn't want it?
copyright: bialasiewicz / 123rf stock photo (licensee)
Consider the scenario: you want to sell your business. Having your premises owned by the business means the value of the business is going to be greater. It also means you may qualify for Entrepreneurs' Relief and should get Business Property Relief, but there may be a big downside to ownership.
"What if the buyers want the business but not the property?"
The deal could fall through because they may want to move the business elsewhere and being tied to your original location could be off-putting. Also, the increased value of the business by it owning the premises could be a deal breaker.
So there are different ways of owning the premises, and each has their own pros and cons:
Personally - if the business owner chooses to hold the property personally, there are significant inheritance tax and entrepreneurs' relief issues to consider, but the property is protected from commercial risk and sale of the trading business is going to be quite straightforward.
Pension scheme - this can actually be a very attractive option for the business owner. For Inheritance Tax, Capital Gains Tax it makes life easier, but the initial purchase of the property by the scheme has to be funded. Access to the resultant monies is only available on retirement.
Separate company – this is fraught with problems unless the company owning the property is a holding company of the trading subsidiary. Take proper tax advice if you choose to do it this way.
This exact issue came up for one of my clients recently. I was working with them to get their business ready for sale. The trading premises needed to be extracted from the company, so after obtaining HMRC approval for the transaction, we moved it to a separate company and sold the trade with the benefits of entrepreneurs' relief.
"Would you like to know more?"
If you'd like to find out more about the most tax efficient way to own your premises, especially if you're considering selling the business, then do call me on 01908 774323 or click here to ping me an email and let's see how I can help you.
Until next time ...
If you're looking to work with an expert tax advisor with a wide range of tax experience, do visit www.essendontax.co.uk to find out more about me and discover how I can help!
More about Helen Beaumont ...
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen’s specialist knowledge in tax planning and experience ensures every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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