Inheritance Tax Benefits Of Property Investment Companies
A very affordable tax planning option ...
Posted by Helen Beaumont on 29/06/2022 @ 8:00AM
A correctly set up property investment company really can save you income tax, and qualify for full tax relief on mortgage interest and Inheritance Tax. In this blog post, we're going to look at Inheritance Tax ...
A property investment company can save you inheritance tax!
All landlords want to reduce the taxable value of their estate when Business Property Relief is unavailable. By using a property investment company, you could mitigate the Inheritance Tax liability attached to your shares.
"It also allows you to pass only part of the company's current value to the next generation!"
If you want to keep the dividend flow going, you could consider using so-called 'freezer' shares. This freezes the value of the shares belonging to you so future growth accrues to your beneficiaries.
This can be achieved by altering the Articles of Association and dividing the company's shares into two classes of A and B shares. A shares carry an entitlement to dividends. Note that when incorporating the property investment company, your current value remains equivalent to the nominal value of your A shares.
All future growth accrues to the B shares that will be given to your children, or to a trust that benefits them in future. This means at this point there should not be any Inheritance Tax implications. B shares have no voting or dividend rights and no capital value above their face value.
"This is because there has been no significant transfer of value!"
All cases are individual so a property investment company may or may not be right for you, but it is always a great idea to take professional tax advice to fully understand the benefits of one.
You never know, it could be a very affordable tax planning option.
Until next time ...
HELEN BEAUMONT
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about a property investment company, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.
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 has specialist knowledge and experience in tax planning and uses 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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