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A higher-rate sole trader client owns trading premises which he is considering developing himself into domestic dwellings (planning permission applied for). He has owned the premises for some time and these stand him at a considerable gain even prior to planning permission and he would prefer to have these charged at 28% as opposed to 40% (or even 50%).
To ensure that the gain is crystallised rather than just carrying the original base cost into the development it is proposed to form a partnership with his wife and to transfer the property to the partnership – crediting his capital account with the market value at that date.
An alternative would be to form a limited company to carry out the development and to transfer the property to that. However with the demise of ESC C16 one needs to consider...
