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AndyBanana
13-02-2006, 13:05 PM
If I take money out of my limited company I have to pay income tax on it - what if the company purchases a share in my house - the payment would then be tax free? Can anyone see a flaw in this approach?
islandgirl
13-02-2006, 14:02 PM
When someone sues the Ltd company and it loses the case - bang goes the share in your house!
Tax Accountant
13-02-2006, 19:54 PM
If I take money out of my limited company I have to pay income tax on it - what if the company purchases a share in my house - the payment would then be tax free? Can anyone see a flaw in this approach?

(1) Benefit In Kind charge / market value rent in respect of the company's share.

(2) When you sell, the gain on part owned by the company will not be exempt.

Ramnik
johnj
05-03-2006, 21:41 PM
Might be OK if you want to move on anyway, and have the company let the property to someone else; but there will be stamp duty (SDLT).
Tax Accountant
06-03-2006, 09:58 AM
Might be OK if you want to move on anyway, and have the company let the property to someone else; but there will be stamp duty (SDLT).

John J,

I do not intend to deter you from replying. However, it is clear that your knowledge of tax is extremely shallow and, at best, very little. If you persist, you will end up giving wrong and misleading advise in majority of your replies.

Even if someone wants to move on, it is generally not a good idea for the property to be in the company's name, especially if one intends to occupy it as their only or main residence, no matter for how short a time. The short period of residence will give them valuable PPR relief not only for the actual period of occupation but also for the final 3 years of ownership. It will also open the doors for the valuable lettings relief. Also taper relief and annual exemption is available to individuals but not to companies.

And what about stamp duty? It will apply regardless of whether the property is bought or let by the individual or the company.

As to the querist, are you aware that you can take out dividends, and not pay any further tax provided your total chargeable income does not enter the higher rate tax? Be aware that dividends may have an effect on the availability of 10% corporation tax to the company.

Ramnik