Entrepreneur's Relief & Rental of Private Premises to Related Companies - May 2008
It has always been a good tax planning opportunity to own premises personally outside of a company structure, and to charge the company rent.
However, after the recent announcements regarding capital gains tax reform and entrepreneur's relief, some concern has arisen as to whether this is now the most tax efficient course.
Entrepreneur's Relief (see separate article) is available for associated assets (those used, but not owned by the company), but it is suggested that relief will be restricted to a just & reasonable amount with regard to:
- Extent to which rent is paid less than the full market rent
- Length of periods of business and non-business use
- Parts of asset used for business purposes
- Length of period the individual has been involved in the business
Once the legislation regarding this has been finalised, further clarification can be given, but the possibility of stopping charging rent on property now, should certainly be considered, particularly, if there are future plans to dispose of, or wind a company up.
In order to explore this further, please contact Rosy or Gary at the office.
To see more articles, see these pages: