Can a beneficiary be a Ltd co?

[PurpleFox]

As per the title really, could a parent leave their assets to a Ltd company upon death....? The children would be directors of the company.

This is not a play to reduce IHT, more to make things easier and more tax efficient for the deceased's children going forward.

Thanks in advance.

[Doofus]

Yes, a limited comomay can be a beneficiary because it's a discrete legal entity.

Ltd companies are subject to Corporation Tax, though.

[PurpleFox]

Doofus said:

Yes, a limited comomay can be a beneficiary because it's a discrete legal entity.

Ltd companies are subject to Corporation Tax, though.

Thanks for that. Yes, aware about the corp tax but overall it would be a better way forward, needs further consideration now that it looks likely to actually be an option.

[Doofus]

Bear in mind that, assuming over the threshold, IHT will still be due, regardless of who the beneficiaries are.

[Mogul]

Curious to know what the double entry would be from an accounting perspective..

DR Cash
CR ???

Share capital?
A [repayable] loan (from a trust created by the estate)??

[Doofus]

Mogul said:

Curious to know what the double entry would be from an accounting perspective..

DR Cash
CR ???

Share capital?
A [repayable] loan (from a trust created by the estate)??

I was thinking about that too. I wondered if the idea was to Cr Share Capital, but IHT will have already fallen due and, at some point in the future, the shareholders will have a personal tax liability on the value of those shares.

I'm not entirely sure what problem is being addressed here, or how a Ltd co will help, but it's none if my business.

[PurpleFox]

Thanks for the info, maybe it's not the best way of doing things, but is an avenue that warrants further thought.

The problem is inheritance of residential property. The children are higher rate tax payers so would rather not inherit the property in their own names given a substantial mortgage would be required to settle the IHT bill, the interest for which would then not be fully deductible but would be under a company.

That's the jist of it, I am sure there are a million and one reasons why it's a bad idea for reasons not yet thought of......

[bennno]

PurpleFox said:

Thanks for the info, maybe it's not the best way of doing things, but is an avenue that warrants further thought.

The problem is inheritance of residential property. The children are higher rate tax payers so would rather not inherit the property in their own names given a substantial mortgage would be required to settle the IHT bill, the interest for which would then not be fully deductible but would be under a company.

That's the jist of it, I am sure there are a million and one reasons why it's a bad idea for reasons not yet thought of......

If the intent is for the property to be kept in perpetuity, then why not just put it in a trust now?

IHT on properties can be paid over 10 years, no need for a mortgage.