Lease to company or not

[frazzel_1999@yahoo.c]

I run a small business and wish to extend my premises and go limited at the same time. I have been told that I should leave the exsisting building and the extension (not yet built)out of the new company, as this will be more benefical in years to come.

However a friend mentioned that I could lease the land (only for 10 years) for the extension to the company and company pay for the extension.

What I dont understand is that in 10 years when lease expires and I sell business, how do I get tax relief on the cost of the extension, as the company paid for this and no longer has the lease. Any help would be grateful, as what is best to do or where to go for advice.

[Simon Sweetman]

From a CGT point of view you are probably best advised to leave land and buildings outside the company. Yes, you can lease the buildings to the company (you will want it to pay you rent). The only reason for letting the company as tenant pay for the extension is cashflow, and it is not helpful for tax purposes (assuming this is not an industrial building).

If you want more specific advice, you can contact me on simon.sweetman@btinternet.com

[tom 7000]

Leave it all outside and rent it to the company...I agree. The only thing to watch out for is if you are thinking of selling up in the next 2 years as it can effect taper relief (ie makes your tax bill bigger.

It might also be easier to move than build an extension, then you can rent the old property out to a third party...who can effectively pay the rent on the new one you move into.


Now you have 2 properties in your own name as business assets which should stand you in good stead for your retirement...at no extra cost

that is if you can find a freehold locally the right size for sale...we are struggling to find one!

tom@ttca.co.uk