Ltd company to avoid SDLT?

adonis10

Dead_keen wrote: »

Sounds like there would still be the extra 3% SDLT for you when you buy your new home as they will be holding the flat on trust for you.

I think your better bet is to respond to the consultation to say that the first home you buy should not have the 3% extra. So, for example, why should someone with one BTL buying a home have to pay the extra 3% but someone with 100 BTL's and a home will not (assuming they sell their old home).

If you do go ahead with your silly idea, don't forget that CGT will apply to you as if you had sold it at market value and that it can have IHT implications for you and again for them (if they 'gift' it back to you later).

Fair enough.

What do you mean respond to the consultation? As in actually put an opinion forward to the government? Ha, as if that will work.

Silly idea maybe, but I'm just doing what every other person with excess cash tries to do, ie. legally pay less tax than they have to. It's just an idea, don't forget.

adonis10

Dead_keen wrote: »

You mean like this: http://www.legislation.gov.uk/ukpga/2003/14/section/95

You know the difference between avoidance and evasion, right?

Dead_keen

adonis10 wrote: »

Ha, as if that will work.

It's worked a lot of times for me.

adonis10 wrote: »

Silly idea maybe, but I'm just doing what every other person with excess cash tries to do, ie. legally pay less tax than they have to. It's just an idea, don't forget.

Maybe you should focus on the "legally" bit?

adonis10 wrote:

You know the difference between avoidance and evasion, right?

Yes.

Savvy_Sue

HappyMJ wrote: »

I'd gift the flat now to someone you trust 100% such as your parents.

There's no SDLT to pay on gifts (but not to companies) which then allows you to buy a house without the SDLT surcharge.

You'll have to think about the consequences though. If they need care the flat could be sold to pay for that care

adonis10 wrote: »

This is actually the latest idea, and probably the only workable one. Gifting to the parents is exactly what I'm thinking but, as you say, the care issue could screw everything.

It's not just the care issue. I'd suggest that each party in this transaction taking separate legal advice could be worthwhile, and definitely a need to update wills.

Things to think about include 'what if offspring dies before either or both parents' and 'what if either offspring or parent requires care' and 'what if either offspring or parents divorce' and 'what if either offspring or parents remarry after divorce or death'.

Also you may trust your parents absolutely, but another issue could be 'what if your parents lose capacity', ie can't manage their own affairs any more. Hopefully they have a Power of Attorney ready to use, BUT their attorney(s) must act in their best interests. So if it appears that the OP's house belongs to the parents - because legally it does - then it's theirs to be disposed of in the parents' best interests.

adonis10 wrote: »

What about when they gift the flat back to me? CGT/SDLT become an issue?

CGT IS going to become an issue when you eventually sell the property, whatever you've done with it in the meantime. Have you been living in the flat up to now? Have you done the 'back of an envelope' sums? Is it worth taking some 'proper' (ie paid for) advice which could save you more than it costs?

adonis10

Dead_keen wrote: »

It's worked a lot of times for me.



Maybe you should focus on the "legally" bit?



Yes.

Well the government don't really care about the little man in the street so I shan't waste my time with that.

Ok, so instead of being unnecessarily obnoxious, maybe explain how it is illegal etc.? I'm merely here asking for advice from people who may have more knowledge than me. I've never been in this situation before, hence the lack of knowledge.

Dead_keen

adonis10 wrote: »

Ok, so instead of being unnecessarily obnoxious, maybe explain how it is illegal etc.?

I tried to help with the consultation point. I think you are wrong in not dropping them a quick email if this is important to you. But that's your choice

If you're planning on 'gifting' £195,000 of something to your parents for no particular commercial reason with them 'gifting' it back to you sometime later then it sounds very much like they are holding it on a simple trust for you. If, like the consultation suggests, the final SDLT rules require an interest in a residential property owned by such a trust be treated as being owned by you, and you deliberately sign the SDLT form saying something else, then that will not fall within the "legally" bit you mention. My guess is that the conveyancer that you use to buy your new house is likely to interrogate you on SDLT (what price are you paying for chattels, what other properties do you have an interest in, etc). That extra process with SDLT, combined with the criminal penalties for SDLT, means that is not a place that I would want to be in.

Now the facts might be different. Your parents may need a flat to live in, have no money to rent and you are super-wealthy so you can just give them one and if so, then there may not be a trust. Or you might say "hold it on trust, but you have complete discretion as to who you give it to later" and so it might be the kind of trust that gets you out of the 3% extra SDLT (and into the more expensive IHT regime for discretionary trusts). Who knows?

p00hsticks

adonis10 wrote: »

Well the government don't really care about the little man in the street so I shan't waste my time with that.

Playing devil's advocate, one could argue that the thinking behind the introduction of the extra 3% SDLT for additional homes was primarily driven by a desire to make the purchase of first home easier for more "little men (and women) in the street".

adonis10

p00hsticks wrote: »

Playing devil's advocate, one could argue that the thinking behind the introduction of the extra 3% SDLT for additional homes was primarily driven by a desire to make the purchase of first home easier for more "little men (and women) in the street".

Yeah, you'd like to think so but it's a conservative government so there's probably a reason to benefit themselves rather than the little man.

My question is "why does the extra sdlt not apply if you have 15 or more properties?"

Dead_keen

adonis10 wrote: »

My question is "why does the extra sdlt not apply if you have 15 or more properties?"

That's not what the consultation says.

Keep_pedalling

I would have thought that there would be a danger of getting cought out with a big IHT bill if this goes wrong. If you gifted this property to your parents today, and they got run over by a bus next week you might get your property back minus 40%.

This gift would also form part of your estate for the next 7 years, and part of their estate for another 7 years when they give it back to you. What the implications of them giving it back to you before those first seven years are up goodness knows because that asset would technically fall in both estates.

Why not just sell up and invest in something else instead? That would save all the hassle of being a LL as well.