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Freehold Purchase > Lease Premiums & Tax Implications


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Hi all,

Before I start I must confess I am actually a Chartered Accountant but this type of specialist tax isn't something I have ever had to deal with!!

I am about to purchase a house under 1 freehold title that is split into 3 separate flats.

I will buy these as an individual (so I am freeholder) and then subsequently assign 3 separate titles and 3 leases to my company (so all value obviously sits within the leaseholds).

Purchasing for £400k. 

I hadn't considered any type of tax implications on assigning the leases as was planning on doing at cost.

The only tax I have considered is the initial SDLT on purchase.

My solicitor has advised whether there will be any lease premium and to seek advice for any other tax implications.

I am hoping there isn't anything!! any advice would be very much appreciated.



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Think you need to revisit how you are structuring this deal. Company and you are separate legal entities. Granting leases to your SPV is deemed a part disposal and therefore you might have to pay CGT. Also the company is liable to pay SDLT when it purchases the leases. You would need to transfer at market value.

You would be better off buying the property in your company and then either transfer the freehold to you personally (the same entity cant hold both as I think you are aware and the value of the freehold will be much lower than the leaseholds so less tax to pay) or set up a second company to hold the freehold and benefit from group relief. 

David M Slater ACMA 
Accufy Accounting
01946 552801


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