Property issues in the care sector – the ownership conundrum

Posted on May 1st, by editor in Caring Times. No Comments

In the care sector, and where companies are being operated, you will typically see two different owners of the freehold property; either within the company or by the individual owners. Which is right and what are the benefits or drawbacks of each? Often, the individuals will own the property as they will have been through the incorporation process from a partnership or sole trader. If the freehold property is transferred into the company, this would give rise to a Stamp Duty Land Tax (SDLT) cost which, typically in the care sector due to high property values, would be at 4%. This represents a real up-front cost of incorporation and, therefore, the property will remain with the individuals. While owning the freehold property avoids SDLT and allows for rent to be charged by the individuals to the company, therefore achieving national insurance free remuneration, there are notable drawbacks: # Capital repayment of borrowings will typically be out of income that has suffered tax at the highest personal rate of 40

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