I going to receive my new 999-year lease with no ground rent payable is given to the leaseholder, after I paid around £7,000 to extend my current flat from 89 years lease to a 999-year lease with no ground rent payable.
I received a piece of advice that there are income tax implications. If matters are arranged so that a new 999-year lease with no ground rent payable is given to the leaseholder, his understanding is that the leaseholders are already aware that something of value is being given to them. In tax terms, this value is being moved out of the company and is being given to the shareholder. This movement of value is known as a deemed distribution, for income tax purposes. A distribution is taxed on the individual as if it was a dividend and each leaseholder would have to declare the distribution on their tax return and pay the additional amount of income tax that arises. This may be 7.5%, 32.5%, or 38.1%, or indeed a mix of those rates.
Isn't true that I need to pay this as a dividend tax above. I was very confused because I already paid £7,000 to extend my current flat lease. Why do I need to pay this as tax (That flat is my private resident since 2013)?
I received a piece of advice that there are income tax implications. If matters are arranged so that a new 999-year lease with no ground rent payable is given to the leaseholder, his understanding is that the leaseholders are already aware that something of value is being given to them. In tax terms, this value is being moved out of the company and is being given to the shareholder. This movement of value is known as a deemed distribution, for income tax purposes. A distribution is taxed on the individual as if it was a dividend and each leaseholder would have to declare the distribution on their tax return and pay the additional amount of income tax that arises. This may be 7.5%, 32.5%, or 38.1%, or indeed a mix of those rates.
Isn't true that I need to pay this as a dividend tax above. I was very confused because I already paid £7,000 to extend my current flat lease. Why do I need to pay this as tax (That flat is my private resident since 2013)?
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