Former Legal & General head of tax and estate planning Mark Green has launched a new product designed to help buy-to-let investors cut potential inheritance tax charges.
Green’s new firm, T&G Legal Solutions, has developed an offering which centres around a reversionary lease – a long lease with a deferred start date. The deferral period is usually less than 21 years, Green says, although freehold properties and some leaseholds can be “considerably longer”.
By placing this lease into a trust, Green says the property owner can give away a “significant amount” of the capital value of the let properties for IHT purposes, defer any capital gains tax charge if the property has risen in value, and continue to receive rental income until the reversionary lease start date.
In order to use the product, the property will need to have been owned by the same person for at least seven years and be unmortgaged when the reversionary lease is granted.
The firm pays advisers a referral fee of up to £500 for each property on which it concludes tax planning for the client.
Green says: “This is a robust solution that advisers can use with clients who have owned buy to let properties for some time and who need to continue receiving the rental income, but for inheritance tax purposes want to give away the capital value.”