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I’ve been researching the merits of buying a property as an individual, and creating a Declaration of Trust (DoT) to nominate the beneficial owner as my company.
What I have determined so far is:
I have the following remaining points to resolve
Unless I've read too quickly that sounds just like BICT where everybody except HMRC & Lenders have agreed that it is a valid and successful way of avoiding S24.What I don't understand is why you don't just have the company buy the properties? I suspect that your answer to this question will indirectly explain to you why your scheme isn't actually approved by the lenders."There is no requirement to advise or seek consent from mortgage providers. This is because their security remains unchanged" - where did you get this information? I suspect the real situation is that every lender is different, and that their answer changes with time. The only way to know is to ask the lender that you are borrowing from, but if you read around you will see that generally lenders, when asked, say "No". FWIW I asked on of my lenders (Commercial) & they said "Yes" so take the trouble to ask.
The fees and mortgage rates are significantly higher than those of an individual BTL currently. So I'm trying to minimise mortgage fees via this method. What does BICT stand for?
BICT - Beneficial Interest Company Trust.The search results from a PT search on this topic:
I'd already gone through all of those, plus many others, didn't quite answer my questions though.
No worries. I have asked our tax partner, RITA, to input here. Hopefully they will be along soon.
A trust has 3 parties, beneficiary, settlor and trustee. Where all 3 are the the same person ( take your own view where the beneficiary is a company but the director or major shareholder is the same is also the settlor and trustee ), then generally it is regarded as a "sham" trust. Just google "sham trust".
I looked into, but avoided due to fear of being bitten by HMRC later on.
its here https://www.howtolaw.co/understand-trusts-392075
Usually an independent trustee is included as one of the trustees, and this will often be the settlor's lawyer or accountant. Having an independent trustee helps avoid any suggestion that the settlor continues to have control of the trust assets, in which case Inland Revenue may argue that the trust is a "sham" and therefore invalid.
Rob asked the same question on Property 118 and got this helpful answer from a solicitor:You can view the full thread >>> here.