There are lots of good reasons to keep property investments in their own companies rather than mix them up with your main business activity.
We have a blog explaining why residential investments should be in a company https://stevejbicknell.com/2015/08/24/5-reasons-why-you-need-a-property-investment-company/
Entrepreneurs Relief when you sell your business is one of the major reasons not to have property in your trading business as significant Non Trading Activity will be a problem, if a business contains investments and if these were more than 20% in terms of turnover, net assets, time spent by directors or profit it could mean that your business is not counted as a trading business.
What is Entrepreneurs Relief
Entrepreneurs Tax Relief applies if you sell or close your business and means that you only pay 10% Capital Gains Tax on any qualifying profits.
There’s no limit to how many times you can claim Entrepreneurs’ Relief, and you can claim up to £10 million of relief in total during your lifetime.
Companies
To claim Entrepreneurs’ Relief you must:
- own at least 5% of the shares in the business for a year
- be a director, partner or employee of the business
Sole traders
To claim Entrepreneurs’ Relief you must have been trading for at least a year.
Full details are on the HMRC Helpsheet HS275
