best vehicle for FHL purchase
I'm hoping for some advice on whether we should take more advice, or not.
I am one of a family of five siblings. We are very close. We wish to buy a UK FHL together for c £1m. For up to 10 weeks a year the family will use it, the rest of the year it will be rented out, at least for the first couple of years. Thereafter the family usage may fall - it i unlikely to rise. Between us we have 10 grandchidren aged 1 to 16. We would like to transfer 10 per cent into each of their names at an appropriate and tax-efficient time. The deposit each will put in will be in proportion to number of kids (30,30,20,10,10 percent respectively and we would at some point but not necessarily immediately wish to raise a small mortgage to make additions to the property to make it a better letting property - We are all higher rate tax paying fully-employed professionals. So are our spouses. Two of the siblings are very close to their 60 percent marginal rates and are settled with the older children, the others do not wish to be owners of this property as their personal circumstances are such that they are likely to move house in the future. Its probably best to consider that we would all anticipate using all of our nil rate bands for IHT on passing on our own property/estates to our own kids.
We have taken professional advice that indicates that a company FHL is not the best way to approach this under current tax rules. (due essentially to BIK). TBH I'm not convinced by the advice, partly because the adviser had to be prompted by us on some aspects of taxation and partly because there was no new information we received from the professional that we had not previously gleaned from the internet...and yet having subsequently done more of my own research I have discovered yet more tax issues not discussed by my professional (ATED, ESC A91, etc.)
Before we take the plunge and buy in the name of one sibling/spouse (other siblings will lend them the money) which they will then gift to all the grandchildren when each reaches 18, I thought I'd just ask here if anyone thought we should pause and reflect on a different ownership pattern. We are aware that the current plan will pretty much preclude the ability to raise a cheap mortgage on the property. We would get life insurance to cover any potential gift risk liabilities.
One question I have for instance is whether ESC A91 can apply to UK properties - as this would seem to open the door to company ownership again for our purposes.It seems that whatever approach we take though we will either pay significant income tax, CGT if values rise before gifting, or IHT - just want to make most tax-efficient approach from the start, and in particular get ownership right. I have started to wonder about partnership, which was not raised by our adviser, though we didn't specifically ask about it!
Also, Is there really likely to be 'better', cost-effective advice from an 'ultra-specialist' in FHL ownership, for instance, or would we simply be falling for internet clickbait claims.
I would be grateful for any views on this, thanks for your time and consideration.