Transfer of main residence to offshore company

[smc129]

I own my own property and have reciently set up a new offshore company, I am one of the main directors. I have agreed in principle to transfer this property to my new offshore company for potential funding purposes. My current property has no mortgage on it.

I have been given conflicting advice regarding Stamp Duty.

I have been told my one person that if i transfer, this can be done on nil consideration and therfore Stamp duty won't be applicable. However, i have been told by another adviser that Stamp Duty will be payable at current market value rate.

So which is correct?

Also if i was to potential re-mortgage property before transferring to offshore company, will this change any potential stamp duty due?

Any help here would be a great assistance, thanks.

[section 44]

The latter is correct. Stamp duty land tax will be due based on not less than the market value of the property (section 53 Finance Act 2003).

[smc129]

...ok thanks.

Is there any difference to stamp duty payable if i re-finance by taking out mortgage on main residence before transferring over to offshore company?

My whole objective here was to raise some finance but i was pushed in offshore direction as i have other assets elsewhere that i wanted to pool in one place, wasn't told about potential stamp duty costs. Feels a little counter-productive now.

[section 44]

Refinancing first wont make any difference. SDLT will still be due based on not less than (practically, equal to) the market value (ignoring VAT) of the property.

The problem is that a different legal person is acquiring the property. As that person is a company and is connected with you, a market value SDLT charge is imposed. Because you are an individual, group relief isn't available (as it may have been had you been a company).

[section 44]

To add, I assume that you own all (or at least the majority) of the shares in the offshore company? Its implicit (although not explicit) from your email.

[smc129]

Not heard of group relief before 'section 44'? How does that work?

Is that a possible consideration for me to consider.

I own a uk Ltd company and have reciently set up an offshore one too, the companies directors on both UK and overseas are all family members. my current main residence is in trust with my family (4 individuals).

Is there a way of using any alternative options to save on some stamp duty costs?

[section 44]

The facts have changed (perhaps significantly - this may explain the previous apparently conflicting advice that you received).

What type of trust is it? A discretionary trust? If so, who is the legal owner(s) of the property (presumably the trustee) If it’s a company (a corporate trustee) then who controls that company (holds the majority of its shares, hence is it connected with the new offshore company)?

You need to clarify who the vendor(s) of the property is (this will be the trustees - assuming that it isn't a bare trust - and not you) and whether the vendor is connected with the new offshore company.

[smc129]

The house is in 5 names my self ,my wife and 3 children yhey all own a 1/5th ofthe house.the is no mortgages We where advised to set up off-shore company and transfer the house into that and raise funding from the house and another property we own.stamp duty was mentioned the off-shore company said that stamp was not payable the lawyer believes it is .the other alternative is to re-mortages our own house to raise funding so negating stamp duty would that work.

[section 44]

That clarifies the facts. We're back to where we thought we were (i.e. SDLT on market value) because the five legal owners are connected with the company transferee.

[smc129]

Would it be better to raise funding from our own home in the family names, this would not be a transfer of legal onwers of the house . Does this mean that stamp duty would not be due as not changing ownership.And to leave the off-shore company on the self at present.