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Julian Gibbs

Keydata has come up with yet another innov- ative investment plan which enables investors to get up to 40 per cent tax relief on investments in residential property.

This tax relief is available because of the Government’s policy of helping to keep traditional shopping streets alive by making use of the upper floors above shops.

The Keydata residential property fund limited partnership is taking full advantage of these tax benefits with the help of Upper Floors Management and Jones Lang LaSalle.

This is how it works. The investment management team identifies a four-storey building with retail space on the ground floor and three upper floors that are currently used as storage space. They buy the property, then sell the retail space and convert the upper floor into flats. This usually takes nine months.

The investment team mortgages the property without any risk to individual investors in order to buy more properties.

Investors can claim tax relief on the capital used to convert the flats. About one-third of the investment may be eligible for tax relief in the first year, so an investor can claim back tax on this. The process is repeated over the next two years, so that over the three-year period the investor will be able to claim up to 40 per cent tax relief on the total investment.

In the fourth year, some excess capital could be created. This is be returned to investors at the beginning of the year.

The rental income from the flats is used to cover management fees and the mortgage interest. In years nine to 10, the properties are sold and profits returned to investors.

Provided that house prices continue to rise over the 10-year period, this investment is an ideal way of building up capital for retirement tax-efficiently and highly profitably.


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Neil Jones is Technical Support Manager with Canada Life’s ican Technical Services Team. Canada Life offers a range of wealth management solutions, including retirement income planning, estate planning and investment solutions from a choice of jurisdictions, including the UK, Isle of Man and Republic of Ireland. A trust can offer significant advantages when an individual is […]


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