Incorporating 14 Scottish properties with a Family Investment Company

Usually, yes. Moving properties from a landlord to their own company is a transaction in its own right, and LBTT, not SDLT, is charged on it in Scotland. The amount depends on the consideration and on which rates and reliefs apply. It should be quantified before the decision is made. In this case it was paid in full, and the client's Scottish solicitor calculated and submitted it.

Under section 59 of the Land and Buildings Transaction Tax (Scotland) Act 2013, if six or more dwellings are the subject of a single transaction, they are treated as non-residential property for that transaction. That brings the non-residential rates into play. Whether that gives a lower bill depends on the values involved. It was used in this case, and the tax was compared with the other relief available.

Yes. Schedule 5 to the Land and Buildings Transaction Tax (Scotland) Act 2013 still provides relief for transactions involving more than one dwelling. Scotland did not follow the change made in England and Northern Ireland, where SDLT multiple dwellings relief was abolished from 1 June 2024. The relief was considered in this case, alongside the six-dwellings rule, against the actual values.

The buyer, here the company, is responsible for the return and payment, and in practice a Scottish solicitor usually handles it with the title transfers. In this case the client's Scottish solicitor of about 20 years quantified the tax and submitted the return, with our input on the tax position. We advise on the structure and the tax and work alongside the solicitor.

Yes. The restriction on finance cost relief applies to individual landlords across the UK, including Scotland. Mortgage interest is not deducted from rent. A tax credit at the basic rate is given instead, so a higher-rate taxpayer can pay tax on rent that is largely spent on interest. A company deducts finance costs as an expense, and Section 24 does not apply to it.

The more interest a landlord pays, the larger the amount that is taxed before the credit. With mortgages over 65% of the property value, interest takes a large share of the rent. Taxable profit can then be much higher than the real profit, and a higher-rate taxpayer may pay a very large share of what is left. A company is taxed on profit after finance costs.

It can be done, but lenders must usually be involved, because the loans may need to be refinanced or moved to the company. Incorporation relief for capital gains tax can still apply: HMRC's extra-statutory concession D32 says business liabilities taken over by the company are not treated as payment for the business. The lender's position and the refinancing cost should be checked early.

Alphabet shares are separate classes of share in the same company, often named A, B and C. Because each class is separate, the directors can declare different dividends on each. Here the classes were used for the landlord's spouse and mother. The company's articles must allow it, dividends must follow the rules for each class, and the tax position of each shareholder needs to be checked.

Shares given to family members can spread dividend income between several people and start moving future growth out of the main owner's estate. Gifts of shares have inheritance tax and, in some cases, capital gains tax consequences, and each person's own tax position matters. Whether it works depends on the family's circumstances and what the owner wants to keep control of.

No. In this case no trust was used, and shares were issued to the landlord's spouse and mother directly. A trust adds flexibility and control, but also adds inheritance tax charges, registration and administration. Whether one is worth it depends on the family, the ages of the beneficiaries and how much control the owner wants to keep.

This one took between two and four months. The time depends on the mortgages, because lenders need to be involved, and on the solicitor's work on the title transfers and the LBTT return. A larger portfolio with several lenders will usually take longer. Starting the lender conversations early helps, as does agreeing the LBTT figure with the solicitor before the structure is committed to.