business property and IHT

[steven13]

I have my own business, being in partnership with my wife. The business operates from a premises which I solely own. Under that set up I believe I will only get 50% relief for IHT on the property.
Am I correct in thinking that if I gift my wife a 50% share in the property so that it then becomes a partnership asset, I will receive 100% IHT relief? Would the ownership of the property have to be in the partnership name or is it acceptable to simply own it jointly.

[AGoodman]

Yes, it must be a partnership asset rather than owned by the partners and that is a question of fact. If you transfer 50:50 and add the land to the partnership - include it in the business accounts etc, it should then qualify.

[sandy2000]

Yes, it must be a partnership asset rather than owned by the partners and that is a question of fact. If you transfer 50:50 and add the land to the partnership - include it in the business accounts etc, it should then qualify.

To understand it better, will appreciate some clarity on making property a partnership asset, how does one add the land to the partnership? From what i have heard so far is that property can only be "owned/registered" by a legal person; partnership is not a legal person - normally partners in a partnership "own" the asset for the "use" or "benefit" of the partnership.

Thanks

[AGoodman]

It isn't essential to hold the property jointly but it might help. The two most important factors would be to make sure the legal documentation (e.g. partnership agreement) make it clear that the partner(s) have contributed the property as part of their capital contribution and for that then to be reflected in the partnership accounts.

[sandy2000]

It isn't essential to hold the property jointly but it might help. The two most important factors would be to make sure the legal documentation (e.g. partnership agreement) make it clear that the partner(s) have contributed the property as part of their capital contribution and for that then to be reflected in the partnership accounts.

Thanks for the clarification Mr Goodman..

So at the LandRegistry it is still "owned" by the original owner(s) - but only in the partnership agreement and accounts it would be noted and treated as a business asset?

[AGoodman]

Yes but:

If the partnership is an LLP, it could hold the asset in its own name
Bear in mind there may be CGT/SDLT/IT implications to transferring the property to the partnership (I don't know what they are).

[sandy2000]

Thanks for info on LLP

So if it is not an LLP, and if the property is held by individuals and only "assigned" to partnership in the partnership agreement (as you mentioned earlier) - thereby making the partnership effectively a beneficiary of the income, who would be named as the "landlord" in any tenancy agreements?
Will it be the legal owner/owners (individual partners) or the beneficiary (ie the partnership)?