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  1. #11

    Still gathering requirements...

    Neil@Intouch's Avatar
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    Quote Originally Posted by independent View Post
    Thanks for the pointers Neil. Will discuss further with my accountant and see what he says.

    One quick question - do you reckon giving a loan or franked investment income to the property company, would put the entrepreneur relief for the IT company in doubt? (i.e. is there a risk of the IT company being classified as investment company due to this loan or franked investment income?)

    Many thanks.
    This won't have any impact on whether you can get ER or not, but if the retained profit is moved to the investment company, it may be that when the trading company is closed you would be covered by the annual CGT allowance, so no personal tax on the closure of the company.

    There is the legislation in place about continuing on the same trade or activity, which could mean that the funds taken from the company to close would need to be treated as dividend income, so having the investment company as a shareholder would be of benefit even further in this scenario.

  2. #12

    Still gathering requirements...


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    Wouldn't this set up be bit risky? For example if there's a legal issue with the trading company then the investment company will be affected too right?

  3. #13

    Still gathering requirements...


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    On this note, say I set up a subsidiary SPV to purchase rental property. What happens if I decide to pack in contracting a few years down the line?

  4. #14

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    Neil@Intouch's Avatar
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    Quote Originally Posted by elpato View Post
    On this note, say I set up a subsidiary SPV to purchase rental property. What happens if I decide to pack in contracting a few years down the line?
    Depends on the set up. If a loan to fund the rental property company, then this would need to be repaid before closing. If dividend income, no repayment is required and you could in fact pay a further dividend from any retained profit to the rental property company for future purchases and on-going costs.

  5. #15

    More time posting than coding

    Darren at DynamoAccounts's Avatar
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    Default Loan to Property SPV

    Quote Originally Posted by elpato View Post
    On this note, say I set up a subsidiary SPV to purchase rental property. What happens if I decide to pack in contracting a few years down the line?
    As Neil advises and also you could take the asset (i.e. loan from contracting company to SPV) as part of a final distribution and pay the tax on it accordingly. Should be reviewed as part of any tax planning. In effect the company then owes you instead of the other company so you have the right to receive the funds.

    I'd suggest taking advice on this as early as possible.
    2016 Contractor UK Forum Adviser of the Year
    Wow!

  6. #16

    Contractor Among Contractors


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    To me this just cements that people should either:
    1) buy BTLs personally (ie not via a company), or
    2) get advice from someone who really knows their stuff before pressing ahead.

    I'm concerned that people hearing snippets on internet forums of clever things to do then either DIYing or getting their run of the mill contractor accountant to assist will end up making a big mistake that bites them in the bum further down the line.

    Where it's 00'000s at stake (as is likely to be the case with BTL properties), skimping is a dangerous game.

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