Moving a property from a company
When moving a property from a company, many assume the transfer must be treated as a benefit in kind or a standard sale. However, there is a more tax-efficient option: transferring the property in specie as a dividend.
A company can distribute non-cash dividends, including property, to shareholders. If structured correctly, this can avoid Stamp Duty Land Tax (SDLT), making it a cost-effective alternative. However, if the property has an outstanding loan or mortgage, SDLT may still apply.
Why Transfer Property In Specie?
Transferring in specie means the asset is distributed as a dividend in kind rather than being sold or provided as a taxable benefit. This approach offers several advantages:
- No SDLT (unless debt is transferred with the property).
- Avoids Benefit in Kind taxation, which would otherwise increase the recipient’s tax liability.
- Prevents Class 1A National Insurance Contributions (NICs), reducing costs for the company.
However, correct documentation must be in place to ensure compliance with HMRC regulations.
When Does SDLT Apply?
Although a dividend in specie can avoid SDLT, tax may still arise if:
- The property has an outstanding loan that is taken over by the recipient.
- The transaction is not structured correctly, leading to potential HMRC scrutiny.
Proper planning is essential to minimise unnecessary tax liabilities.
How We Can Help
At Lewis Brownlee, we specialise in moving a property from a company tax-efficiently. Our team can help you:
- Structure the transfer correctly to avoid SDLT where possible.
- Ensure compliance with HMRC regulations and prevent unexpected tax charges.
- Provide expert tax planning for businesses and property owners.
If you’re considering moving a property from a company, contact us today via our contact page for expert advice.
Proper tax planning can save you thousands—make sure your property transfer is handled the right way.