Property tax - Tough times for landlords
Both tenants and landlords are facing unplanned costs in their businesses. Trading companies that are tenants may have to make a penalty payment to exit a lease early when the landlord is unlikely to find anyone willing to occupy the premises at similar rental levels. On the other hand, to attract tenants to a vacant property a landlord will have to offer incentives to prospective tenants.
Straightforward payments of this type can be very tax inefficient. Frequently the person making the payment will not be entitled to deduct the expense in working out their taxable profits, yet the recipient will be taxed in full on the receipt.
With careful structuring we can achieve a tax efficient lease exit and for landlords structure incentives to maximise the amount of cash that is available to the tenant - opening up the possibility of the landlord and tenant sharing the tax benefits.
Various circumstances that could give you an opportunity to change planned transactions to make them more tax efficient are summarised in the attached note.