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bigduckontax, Accountant
Category: UK Tax
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Best way to own property , off shore company or company out

Customer Question

Best way to own property , off shore company or company out side uk. My purpose of investment is rent. Beside I'm worried about inheritance tax. My aim to own around 6 properties with income less than 10000 pound a month
Submitted: 1 year ago.
Category: UK Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Possibly offshore through an offshore limited company. Otherwise with an income that high you will be well into the 40% tax bracket. Owning through a company, either UK (corporation tax (CT) is only 20%) or offshore you would personally only be taxed on any distributions to you.

Whichever way you invest you will get eventually caught for Inheritance tax (IHT) which is at a 40% flat rate for any amounts over 325K. The 3325K is increased by any charitable or inter spousal bequests.

Have I been of assistance? Please don't hesitate to follow up if you need more information.

Customer: replied 1 year ago.
Does off shore company tax on only
distribution applies to my company incorporated in my country now, Qatar . If it applies why bother to open off shore company .
I didn't get inheritance tax issue on company . As you know if the company incorporated out side uk , how the tax authorities would know about the death of one of the share holders of a company
Expert:  bigduckontax replied 1 year ago.

Qatar taxes companies as follows [source: Expat Focus]:

'Corporation tax is payable on a progressive scale on any income in excess of QR 100,001, from 10% up to a maximum rate of 35% on income in excess of QR 5 million. There are a number of allowable deductions including interest payments, salaries, rentals, depreciation etc.'

Offshore companies are popular because of taxation and capital gains advantages, not to mention anonymity regarding ownership through reduced disclosure requirements. With the increased inter country exchange of data and possible UK [incidentally now a tax haven in its own right] legislation on taxation of off seas organisations things may become more tricky. They are also expensive: operations in the Channel Islands, Gibraltar, Turks and Caicos Islands are big business and fees relatively high.

HMRC may become aware of the existence of an overseas holding when the executors or administrators take over and declare same for Inheritance Tax (IHT) declarations. When a person dies all their assets world wide are aggregated and exposed to IHT.