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Readers' forum : Mixed partnerships

17 April 2018
Issue: 4643 / Categories: Forum & Feedback

Transferring share in a property to mitigate interest restrictions.

My client is ‘suffering’ from ‘clause 24’ the new rules restricting tax relief on interest paid by residential landlords (F(No 2)A 2015 s 24) also known as the ‘Osborne tax’. To mitigate the effects of this I am wondering whether the following strategy might be beneficial.

As is well known two joint owners (A and B) of a property can alter the receipt of rental income so that it is received not in the same proportion as the ownership of the property but in some other proportion. This is as set out in HMRC manuals at PIM1030 and TSEM9130 although compare BIM82055.

Let us suppose that A is an individual who owns 100% of a residential property. Further let us say that they gift 1% of that property to B Ltd – a company in which they own 100% of the shares. I...

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