Effects of inheritance tax on letting business?

  • Filter
  • Time
  • Show
Clear All
new posts

    Effects of inheritance tax on letting business?

    Hi there,

    Should one pass a home or money to their sibling then there is 7 year period (and a sliding scale) for which the sibling might become liable to inheritance tax.

    (1) Am I correct in assuming that this is exactly the same situation if, for example, a couple of HMO properties are transferred to a sibling?

    (2) Does this change if those same properties were actually owned under a limited company?


    No, the liability would remain with your estate.

    (1) Yes

    (2) It would depend where the debt lay.

    2a. Company contains property worth £1m. Value of PET £1m.
    2b. Company contains property worth £1m, and bank loan of £0.8m secured over property. Value of company and hence PET £0.2m.
    2c. Company contains property worth £1m. Bank loan of 0.8m is a personal loan to individual, secured against (say) main residence, or shares. Company transferred, and sibling takes out loan of 0.8m secured against (say) main residence. Value of PET £1m.


      PET= Potentially Exempt Transfer (i.e. exempt from IHT- Inheritance Tax- if the donor survives seven years).
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).


      Latest Activity


      • Reply to Corporation Tax
        by Thurrock1

        the other directors can't withhold information from them - I am my husband's agent as he has dyslexia and has difficulty with all this. This has been explained to the director but he does not like me and chooses not to recognise in that case anything I/my husband writes.
        25-11-2021, 09:39 AM
      • Corporation Tax
        by Thurrock1
        Hi, Please can someone tell me if Corporation Tax only becomes payable to the IR on sale of an asset.
        My husband is a director of a property development company - there are only 3 directors.
        He wants to leave and there is no communication with the other directors and it is difficult to get...
        23-11-2021, 19:15 PM
      • Reply to Corporation Tax
        by jpkeates
        If your husband is a director, the other directors can't withhold information from them; unless there are some very specific rules in the company articles - and they wouldn't normally be appropriate in a property development business (which are usually set up with boilerplate documentation).
        24-11-2021, 18:36 PM
      • Reply to Corporation Tax
        by theartfullodger
        IR (The Inland Revenue) were dissolved April 2005. Advise against sending them payments....
        24-11-2021, 17:50 PM
      • Reply to Corporation Tax
        by Thurrock1
        Thanks Gordon999. I have been phoning around about this today. This is a property development Ltd co. it had problems and so in 5 years only managed to develop 1 property - a house into flats. My husband owns one third of the company.

        It is not being sold. The other directors need to...
        24-11-2021, 17:47 PM
      • Reply to Corporation Tax
        by Gordon999
        The company pay CT on the "trading profit" reported in the annual accounts.( which are filed annually at Companies House).

        After the asset (the building) has been sold, the trading profit will be reported in the next annual accounts by accountant and CT will be payable to...
        24-11-2021, 11:33 AM
      • Reply to Student HMO and Holiday let
        by Neelix
        In most areas student houses don't pay council tax ....... move in a "non student" and Council tax will apply
        18-11-2021, 07:54 AM
      • Student HMO and Holiday let
        by lewis593
        Hello everyone. Can I rent my 4 bed property to students and holiday makers at the same time? For example 3 bedrooms will be used for students and 1 bedroom will be used as a holiday let. Would this have any tax/council tax implications? Would it be classed as a holiday let and be liable for business...
        17-11-2021, 19:54 PM
      • Reply to Student HMO and Holiday let
        by nukecad
        Flag any of your posts (the little flag at the bottom of them) and ask the moderator if he can change the name for you....
        17-11-2021, 23:00 PM
      • Reply to Student HMO and Holiday let
        by lewis593
        Can I rent my air b and b property to students?
        17-11-2021, 20:34 PM