Solar rent

[Grass And Grain]

Im not sure if any tax is payable when changing the status of a farm (sole trader or patnership) to a ltd company?

We've got CGT tax, but that was selling the land to the Ltd.

 

[Doing it for the kids]

Im not sure if any tax is payable when changing the status of a farm (sole trader or patnership) to a ltd company?

I think it’s treated as a sale

But if you just lease it…..

 

[teslacoils]

I think it’s treated as a sale

But if you just lease it…..

I think that if the shareholders are the same as the directors then the transfer is not deemed to have a gain etc. But I dont know all the fancy words. Probably only applies if youre shifting the lot into the ltd.

tbh if its a big block then it needs some specialist advice.

 

[Flatland guy]

We've got CGT tax, but that was selling the land to the Ltd.

I don't think it is CGT when going to limited company but have to pay stamp duty land tax based on a realistic value of the land even if no money changes hands, well the limited company would have to.

 

[Grass And Grain]

I don't think it is CGT when going to limited company but have to pay stamp duty land tax based on a realistic value of the land even if no money changes hands, well the limited company would have to.

Would depend if sold or gifted? If gifted, I think there's no SDLT unless there's a mortgage on the land (in which case I think there is SDLT?).

Edit. I was presuming change of ownership down a generation (which may not be the case).

 

[Grass And Grain]

When selling down a generation into a Ltd, what you can do is father sells land to Ltd Co. Say it's 10 acres and value of £100k. Father is a director and now owns the shares of the Ltd Co.

Dad the Ltd Co Director took out a director's loan of £100k to buy the land. So dad the shareholder now has some land worth £100k in the Ltd and he has a director's loan of -£100k which he borrowed from himself (which he got from the Ltd when he sold the land to the Ltd). Hence his shares are worth zero as the companies assets are worth exactly same as the liability of the loan. Father can then gift these valueless shares to kids.

Only thing is, private individual dad now has a paper loan to him of £100k, so that would be in his inheritance tax calculation.

I'm told that's totally legit.

 

[Flatland guy]

When selling down a generation into a Ltd, what you can do is father sells land to Ltd Co. Say it's 10 acres and value of £100k. Father is a director and now owns the shares of the Ltd Co.

Dad the Ltd Co Director took out a director's loan of £100k to buy the land. So dad the shareholder now has some land worth £100k in the Ltd and he has a director's loan of -£100k which he borrowed from himself (which he got from the Ltd when he sold the land to the Ltd). Hence his shares are worth zero. Father can then gift these valueless shares to kids.

Only thing is, private individual dad now has a paper loan to him of £100k, so that would be in his inheritance tax calculation.

I'm told that's totally legit.

It is all very complex and what one advisor says another will argue they are wrong, they are right. Won't father have to pay CGT on the 100k from 1982 value or value when purchased if not full time retiring specially if still keeping other land.

 

[Grass And Grain]

If you're an older generation passing it down a generation, you can gift it in, but you'll have to live 3-7 years, otherwise any value over and above ag value will come into your IHT calculation.

 

[Grass And Grain]

It is all very complex and what one advisor says another will argue they are wrong, they are right. Won't father have to pay CGT on the 100k from 1982 value or value when purchased if not full time retiring specially if still keeping other land.

Yes, he would have to pay CGT from 1982 value.