Simon Howley considers the main issues associated with incorporating a property portfolio, with commentary on the recently-issued HMRC Spotlight 63.â¯
In the early 2000s, it was common practice to ï¬nd property held within the trading company. As this was the primary source of revenue, it was cheaper than extracting monies via dividends or salary and then buying the property out of net income.
However, the downside to holding the property within the company was that the company paid corporation tax on any disposal. Then, the individuals paid income tax on extracting the net proceeds. It felt like 'double taxation'.
With careful transaction structuring and clever use of the then stamp duty land tax (SDLT) rules, it was possible to extract the property from the company without triggering either an SDLT charge or a capital gain within the company. This was never a perfect solution, but clients were happy that
