FORMING A LIMITED COMPANY

[bob561941]

i own a number of investment properties which means inheritance tax for my children if my wife predeceses me.if i formed a limited company and put future property investments in to the company woud inheritance tax still be payable ?

[buildersmate]

Are you clear that no IHT is payable when one half of a married couple passes away, and leave his/her estate to the spouse? Any IHT is payable only when the second partner dies, and it is payable on the residual value of the estate, less any nil rate band allowance. Also the nil rate band from the first to die is transferable to the estate of the second to die, meaning that the value of the nil rate band is currently £650k.

In any event (no deaths in the short term), creating a limited company that establishes you and your wife as directors may be beneficial, but you really need proper (paid for) tax advice on this.

[Skyline D]

As BM suggests, this is the sort of move that requires proper advice, not a few lines from strangers on the internet but presuming the intention is that you (or you and your wife) would own the shares in the company now and then children would inherit the shares on your death then, yes, inheritance tax would still potentially be payable. The company would need revalued so that a value could be put on the shares at date of transfer.

There's also potentially an issue for tax at the point of transferring the properties into the company depending on how it's done.

[dzug2]

Don't forget too there is a considerable bureaucracy in running a company keeping Companies House, HMRC, H&S and the like happy

[Skyline D]

There really isn't dzug.

You need to prepare an annual set of accounts and file them (online most likely) and you need to make an Annual Return at a cost of £14. You also need to do a Corporation Tax return for HMRC. That's about it once it's set up. There's almost no bureaucracy. He'll already being doing a Tax Return for himself if the investments are already in his own name so there's nothing extra in doing it for the company.

Health & Safety has absolutely no relevance here.