Is it a good idea to buy a property within my company?

The general rule is that you should be cautious about buying capital assets inside a company.  There are situations where it is sensible, but for most, the problem with owning a freehold or long leasehold in a company is that when the property is sold, tax is paid by the company, and then further tax is paid by the owner in order to extract the profit.

It is necessary to consider the tax rates that may be applicable to property gains in alternative scenarios, the flexibility of creating rental income if the property is held privately and rented to the company, stamp duty and indexation allowances which are still available to companies.

In addition you may find it is advantageous to require a freehold property within a self invested pension plan (SIPP) where income from rents from the company accumulate free of tax, and any gain on the ultimate disposal of the property is also free of tax.

The decision as to how best to go about acquiring a property in a commercial environment needs to be considered in the light of the company’s situation and also your own personal position, as proprietor.

To find out more, call us on +44 (0)330 024 3200, and talk to one of our business tax experts.

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