Commercial Lease - With Company other than Owner

[riverrun]

Hi,

Is it possible to have a commercial lease between the tenant and a company, when that company is not the registered owner of the property?

Background to this: I am looking to have the rental income from some of my properties paid into a company, while I remain as the owner, in order to reduce the tax burden. But I prefer not to transfer ownership of the properties. There are no mortgages on these properties.

Is this allowed, and are there any issues with this arrangement such as CGT exposure?

Appreciate any guidance on this.

Thanks in advance!

[AGoodman]

Yes, but it would require you to grant a lease to the company - which is still a property interest in the property. I don't think a lease of less than 7 years need be registered.

Tax treatment is very similar to that of a transfer of the freehold, just lower sums involved (depending on the duration of the lease). You would come up against SDLT and CGT issues as well as IHT if you did not receive payment (or shares) from the company in return.

The main problem is that you will end up paying more income tax overall - both CT and income tax on the resulting dividends out of the company.