Family LLP or not for rental properties?

Visa_king

Hi,

I own 5 properties in my personal name for over 15 years (1.5 capital owned) and did not incorporate over section 24 a few years ago.

I am married and now have 2 kids. I am looking into setting up a Family Limited Liability Partnership to furtureproof the properties for my family and to aid in tax savings.

I have made profesional connections into this and been told around £10-15k will set this family LLP up and about the advantages in reduced tax and zero inheritance tax for the kids as they naturally take it over when I die. However, all sounds too good to be true so I'm reaching out for anyone who has set one up and their experiences and/or any professionals who can simply say yay it's not a tax avoidance scheme OR Och, watch out.

Thanks in advance.

Grumpy_chap

Visa_king said:

Hi,

I own 5 properties in my personal name for over 15 years (1.5 capital owned) and did not incorporate over section 24 a few years ago.

I am married and now have 2 kids. I am looking into setting up a Family Limited Liability Partnership to furtureproof the properties for my family and to aid in tax savings.

I have made profesional connections into this and been told around £10-15k will set this family LLP up and about the advantages in reduced tax and zero inheritance tax for the kids as they naturally take it over when I die. However, all sounds too good to be true so I'm reaching out for anyone who has set one up and their experiences and/or any professionals who can simply say yay it's not a tax avoidance scheme OR Och, watch out.

Thanks in advance.

You own these properties now in your personal capacity (Visa_king as the legal entity).

If you now create a new legal entity (King Family LLP), do the properties need to be sold from the current legal entity to the new?  If so:
 - current legal entity will be liable for CGT now on disposal of the properties
 - new legal entity will be liable for stamp duty now on the purchase.  This is an additional tax now that needs to be set against possible future tax savings.

Has a professional advisor confirmed the "zero inheritance tax" status?  I would have assumed that the King Family LLP would have four partners (OP, OP's wife, child 1, child 2).  At death of OP, the OP's ownership of assets in the LLP would become part of the OP's Estate and subject to IHT calculation.

I am not expert with LLP rules, so the key word in my comments above is very probably "assume" and we all know what that did to U and Me.

[Deleted User]

I’ll not comment on the scheme but ………10 - 15k !!!!????

Thst is extraordinarily expensive.

Oh - and tax avoidance is perfectly legal! Tax evasion is a different story!

Mrs_pbradley936

All over the internet to NOT go anywhere near an LLP scheme for help with landlord tax Less Tax for Landlords: the £50m landlord tax avoidance scheme that HMRC say doesn’t work, and can trigger a mortgage default. – Tax Policy Associates Ltd.

If you meet the criteria you might be able to incorporate BUT you can't have any other job because you have to be able to devote a minimum of 20 hours a week to it in order for it to be considered a "business". Lots of other pitfalls too.