LEGAL CORNER
Investment property and holding companies By Owen Hill, Consultant Solicitor
If you have, or our about to acquire, a holiday home or other buy-to-let property then you might want to think about whether owning the property as an individual (or jointly with others)
really makes any sense when you could create a new limited liability company to hold it on your behalf instead. Such a limited liability company is commonly called a
‘special purpose vehicle’ because it is created for the single purpose and is not intended to carry on other trade. A transfer of property by an owner or owners to a company in which they hold shares in the same proportion is free from Stamp Duty because HMRC accept that there is no actual change in the beneficial ownership of the property. Did I mention Stamp Duty? It is now called Stamp Duty
Land tax and can be a very significant cost to any dealing with land. The rate is now 5% on values above £1M and an eye watering 7% on values above £2M. Stamp Duty is payable on the transfer of shares in a
limited liability company at the rate of only one half of one percent – so there are no prizes for guessing what
innovative solicitors started to do for clients buying high end property. The seller was persuaded to transfer the property to a company and then sell the shares in the company to the buyer. Everyone was happy except HMRC. First HMRC imposed rules to say it would take a dim
view of anyone who transferred property to a company in contemplation of a sale and issued guidance to the effect that it would regard a sale within three years of a transfer to a company as a scam. These days it is still worth considering if you have no
immediate plans to sell the property or you intend to keep the property but eventually transfer the whole or part of the property to your family as part of your Inheritance Tax planning. It is a lot easier and cheaper to transfer shares in a company that owns property than it is to divide a property between people. There is also a quirk in the current HMRC practice on valuation that works in favour of the tax payer.......but I will tell you about that the next time I see you in my office.• For more information, please contact Owen Hill on 01803 832191 or on email:
owen.hill@wollenmichelmore.co.uk
Digital Life after Death By Marinella Hollies, Associate Solicitor
If you have ever thought about making a will, or have already made one, did you think about how your digital assets such as online photos or social media accounts may need to be dealt with? How should your online financial matters like PayPal
or Ebay accounts or online bank accounts be sorted? How will your executors even know they exist, or how to access them when you are no longer here? The problem of dealing with online assets is a serious
one given the rapid growth of the internet and the ever increasing number of online apps available. It’s easy to overlook digital assets when making a will –
but some thought needs to be given as to how they are to be dealt with, and in particular, who has the right to access them after your death. For example, do you want other people to be able to read your emails or see your private pictures after your death? Who can terminate your PayPal account? What if you have an active Ebay account? Most social networking and personal e-mail accounts
do not belong to the user, but to the service provider that administers them. However, you can plan for how to deal with those accounts after your death by leaving your account details and passwords with clear instructions of your wishes with a carer or your executor. Information in these accounts can be archived or
saved onto an external drive first so that a record can be retained, before closing them down. It is even possible to keep such accounts open as a digital memorial for the public or chosen people to see, if that is what you want.
Internet banking transactions need a different approach:
Invariably they require the user’s name and password, which you have an obligation to keep secret under the terms and conditions of the account. Giving this information to your executors during your lifetime will constitute a breach of those terms and conditions. Those (and other) instructions can be recorded in a
person’s will. Or, if you do not want to include sensitive personal information in your will (remember your will becomes a public document after your death) you can leave separate instructions to your executors given them the information that they will need to access and deal with the accounts. This information can be kept securely with your will, but does not appear on your will so remains private. This is another reason why you should use a solicitor to draw up your will to ensure that you get the right advice about how to deal with such matters. as an added benefit, it is quite likely that your will and private papers can be stored securely and confidentially by your solicitor until after you have died. This also ensures that you do not breach the terms of your agreement with your bank or other institution. Leaving clear instructions for the access and management
of your digital assets is the key to ensuring that your last wishes are carried out smoothly and exactly how you want them to be dealt with. Getting the right advice and being able to give clarity on
the distribution of all of your assets, both physical and digital, will make it less painful and easier for loved to cope after of your death.• For more information, please contact Marinella Hollies on 01803 832191 or email:
marinella.hollies@wollenmichelmore.co.uk
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