Tax payable on share of freehold payment?

sparklewoman
by sparklewoman 14 November 2012  |  Comments 4 comments  |  Love Love  0 loves

Is tax payable on a share of freehold membership payment made to existing 3 freeholder members by 4th joining member, either on a personal, individual basis or as a limited company - already set up to manage our property?

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Comments (4)

  • MikeGG1
    Love rating 909
    MikeGG1 posted

    It would depend on the set up. You wouid either get Principal Residence Relief so nothing payable, or it would be liable for capital Gains Tax, in which case you would each have an Annual Allowance of £10K before paying tax.

    Mike.

    Posted on 15 November 2012 | Love Love  0 loves Report
  • sparklewoman
    Love rating 0
    sparklewoman posted

    Thanks that is very helpful! As it is all of our 'principal residence' and the sum each of us would receive will be less than £10k, then it seems there will be nothing payable. Can I clarify that the capital gains tax bit is a seperate tax allowance from the one we would have for paid employment?

    In any case do we still have to altert the tax man in some way - either as individuals or through our limited company?

    Posted on 15 November 2012 | Love Love  0 loves Report
  • MikeGG1
    Love rating 909
    MikeGG1 posted

    CGT has a separate allowance from earned income. There is a linkage in the rate payable above that in that the lower CGT rate is only payable on the excess on the remaining amount of lower tier earnings.

    If the Limited company does not already own the whole freehold, I would keep it out.

    As individuals, you would not need to declare gains resulting from payments of less than the limit.

    When it comes for one of you to sell, you would market your Leasehold property together with a 25% share in the whole freehold and 25% of the limited Company.

    Mike

    Posted on 15 November 2012 | Love Love  0 loves Report
  • sparklewoman
    Love rating 0
    sparklewoman posted

    Thanks once again for your very helpful response.

    Posted on 16 November 2012 | Love Love  0 loves Report

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