My wife and I have a Commercial lease for a retail properly with residential uppers which was acquired around 30 years ago when I purchased a business as a going concern. There is 7 years remaining on the lease. I have granted the lease to a third-party for which I get an Income of £30k per year which is split with my wife.
We would like to gift the beneficial interest in the lease to our 3 grandchildren (all minors) through a Bare Trust. The aim is to reduce our taxable income and for the grandchildren to use the income to pay their private school fees. I assume the grandchildren can use their tax free allowance and hence pay no tax on the income.
What I would like to understand is:
1. Does my proposal work?
2. How do I gift the beneficial interest in the lease to the Bare Trust - Can I simply use a Declaration of Trust?
3. Is any CGT or SDLT applicable to the gift or any other tax?
4. Can I open a bank account for the Bare Trust and if not, what bank account do I use for the income?
5. Do I complete a tax return for each of the grandchildren (But not for the Bare Trust)?
6. Are there any disadvantages to this setup?
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