Stamp Duty on trasnfering your own home to a limited company

[Johnny Be Good]

I am in the process of transferring my main residency home into my limited company. I lived in that house for 24 years.
I understand I am exempt from paying CGT. But do I have to pay stamp duty at market value?

How does the incorporation relief applies in this case?

 

[DWS]

I am in the process of transferring my main residency home into my limited company. I lived in that house for 24 years.
I understand I am exempt from paying CGT. But do I have to pay stamp duty at market value?

How does the incorporation relief applies in this case?

First question would be Why?
Second would be how are you even considering doing something like this without seeking professional advice first?
And third, what are you actually trying to achieve?
You do not have to pay SDLT but the Company will as far as I am aware.
You are transferring your PPR not your business so cannot see how incorporation relief will come into play.

 

[fisicx]

Why are you doing this? We looked at doing the same and everyone we took advice from advised against.

 

[WaveJumper]

Have to agree with those above I really not sure you are heading down the right path who has adviced you this is the right course of action and what are you trying to achieve

 

[JEREMY HAWKE]

Madness pure Madness

You run a limited company to protect your personal assets

If you do this and your company goes bust you will lose your home and will be enjoying the comforts of a large cardboard box

 

[WaveJumper]

Agree with above - we could also do with more details on what the end goal is here, there seems to be a thing out there especially on social media giving the impression you can save on tax, inheritance tax etc but (not giving any advice here) this is not always the best course of action. In fact with regards inheritance tax you could be doing yourself a big disservice.

More details required and specialised advice should be sought

 

[UK Contractor Accountant]

if you are looking to protect your home down the line then look at Asset Protection Will Trusts.

Take proper advice before committing to transferring your property into a Ltd company, Trusts or anybody-else's name.

Reading between the lines here - think the OP has moved to another property and is going to rent out his previous main residence so wants the tax benefits of having a rental property held within a Ltd company.

 

[Johnny Be Good]

Why are you doing this? We looked at doing the same and everyone we took advice from advised against.

Sorry, I did not make myself clear here!. I own three houses. One that i bought in my company's name, then the second home that I lived in for 24 years I transferred it to my limited company just after I moved out and last year I moved into my new home( third ) that is not in my company.

So my question the previous home that I lived in for 24 years I understand you do not need to pay capital gains tax but will my company that has been transfered to has to pay stamp duty?

 

[DontAsk]

What does your solicitor or accountant say? What about the person who actually did the transfer? Were they a professional?

 

[UK Contractor Accountant]

I understand you do not need to pay capital gains tax but will my company that has been transfered to has to pay stamp duty?

No CGT as main residence relief applies - deffo stamp duty though.

HMRC will treat the Property as being transferred at full market value. maybe the higher rate of SDLT will apply as second property rules might apply here. Cant tell you how many Solicitors get this wrong!

 

[DWS]

Sorry, I did not make myself clear here!. I own three houses. One that i bought in my company's name, then the second home that I lived in for 24 years I transferred it to my limited company just after I moved out and last year I moved into my new home( third ) that is not in my company.

So my question the previous home that I lived in for 24 years I understand you do not need to pay capital gains tax but will my company that has been transfered to has to pay stamp duty?

So the sale of your PPR to the Company took place last year? As far as I am aware you had 14 days to pay the SDLT after completion, as mentioned above why did your Solicitor not advise on this?

 

[WaveJumper]

Correct 14 days from completion and generally the solicitor will add amount to their fees and pay on your behalf ..... result if your solicitor has already paid it.

 

[DWS]

Correct 14 days from completion and generally the solicitor will add amount to their fees and pay on your behalf ..... result if your solicitor has already paid it.

First we need to establish that a Solicitor was actually engaged

 

[Johnny Be Good]

Correct 14 days from completion and generally the solicitor will add amount to their fees and pay on your behalf ..... result if your solicitor has already paid it.

Our public service in this country is so great, I applied via my solicitor to do the transfer in October 2024 last year and land registry still has not process it and according to my solicitor shows as "processing". I am wondering where all the billions of our tax is going! Anyway the property is only £125K worth so stamp duty at 3% not a big deal at £3750. It is currently a rental so it saves me a lot of money having it in the company as I loaned my own money buying my first property in the company so I will not have to pay income tax for the next 15-20 years. I loaned £280K!

 

[WaveJumper]

Having had to deal with land registry myself this year I think they are all working from home, although I have to say actually downloading documents from their website was pretty strieght forward ...... once you'd paid your fee of course

 

[Johnny Be Good]

Having had to deal with land registry myself this year I think they are all working from home, although I have to say actually downloading documents from their website was pretty straight forward ...... once you'd paid your fee of course

If you need an official document from Land Registry you need to download an OC1 form, fill it in and post it along with a cheque of £11 to the land registry! What kind of world are they living in! The last time I wrote a cheque was when I was a student in 1996!

 

[DWS]

It is currently a rental so it saves me a lot of money having it in the company as I loaned my own money buying my first property in the company so I will not have to pay income tax for the next 15-20 years. I loaned £280K!

But you have 2 houses you do not own the Company does, the Company paying C/Tax on the rental profits and then you can reduce the money owed to you tax free but it also reduces your capital investment, if properties are sold the Company then pays C/Tax on the profits and yes you can withdraw the remaining amount owed to you personally but any thing above this you need to pay tax on, hopefully you have sat down and done the maths to make sure it makes sound financial sense.

 

[Johnny Be Good]

I have two companies, my main company the manufacturing one, is the one that makes real money and I receive a salary and dividends from it. I am also a higher tax payer so I would not withdraw any more money from the second company( the buy to let ) as almost half of it it will fund illegal refugees and people on benefits!

The Buy to Let company is an investment company that I put any extra cash and buy property that will hopefully provide me with an income when I retire as I am not planning to keep the manufacturing company for too long, it is really hard at the moment.

If I had the two properties in my name any rental income would have ben taxed at 40% where now as the company's revenues are below £250K a year the tax paid is only 19% and I can offset any repairs on my tax return. Yes I will have to pay more tax if I withdraw any money in the future but with the government going so aggressive against private landlords I think I have no other choice other than sticking with the Corporate structure.

 

[UK Contractor Accountant]

I doubt your companies are paying tax @ 19% - only the first £25K of each company's profits will be at the 19% rate.

 

[DWS]

I am also a higher tax payer so I would not withdraw any more money from the second company( the buy to let ) as almost half of it it will fund illegal refugees and people on benefits!

Whilst I do believe you may regret your tax planning at a later date, I do agree with your analysis here!

 

[Johnny Be Good]

I doubt your companies are paying tax @ 19% - only the first £25K of each company's profits will be at the 19% rate.

My manufacturing company made £120K profits last year and yes we only paid 19% tax.

 

[DontAsk]

My manufacturing company made £120K profits last year and yes we only paid 19% tax.

I would read this https://www.gov.uk/government/publi...tion-tax/rates-and-allowances-corporation-tax and speak urgently with your accountant before HMRC come after you.

TLDR: "Companies with profits between £50,000 and £250,000 will pay tax at the main rate, reduced by a marginal relief. This provides a gradual increase in the effective Corporation Tax rate."

 

[UK Contractor Accountant]

Companies with profits between £50,000 and £250,000 will pay tax at the main rate

yes and those limits will be halved as he has another company under his control

 

[fisicx]

yes and those limits will be halved as he has another company under his control

Does that mean the thresholds are lower resulting in higher taxes?

If so it makes transferring the house to the company even less attractive.

 

[UK Contractor Accountant]

Does that mean the thresholds are lower resulting in higher taxes?

If so it makes transferring the house to the company even less attractive.

yes the thresholds are adjusted by the number of associated companies in the period - so if have 3 companies under your control then all limits are divided by 3 resulting in higher taxes.

 

[fisicx]

yes the thresholds are adjusted by the number of associated companies in the period - so if have 3 companies under your control then all limits are divided by 3 resulting in higher taxes.

Which means @Johnny Be Good could be in all sorts of trouble. Maybe he needs to have a chat with his accountant.