Readers’ forum: Tax considerations on a licence over rental property

Rental properties

My client has over 40 residential rental properties which he licenses to a company that he owns. The licence fee on each of these properties is £2 400.

The income from rents is mainly used to pay an outstanding mortgage against some of the properties. The company manages the properties finds tenants repairs them and bears all other costs and retains any profit minus the licence fee.

The fee of £2 400 per property does not appear to have changed for some time and I am not sure how this was calculated. This arrangement does not appear to be a commercial one as the company ends up with a healthy profit each year which otherwise would have been taxed on the client at a higher rate.

What do readers think about the practical and tax implications of this arrangement?

Query 19 915 – Licence...