Limited Liability Companies (LLC's)

The Limited Liability Companies Act 1996 is now on the statute book and LLC's are beginning to find favour, particularly in international tax planning where characterisation for tax purposes is required.

A potential use in the domestic market of LLC's has arisen for Isle of Man residents who are considering purchasing property in the UK for investment purposes. If the property investment is made in an LLC an inheritance tax exposure in the UK on the property will be removed due to the corporate nature of the ownerships. For income tax purposes the rental income will still be subject to UK tax at the basic rate (23% from April 6, 1997). The company, however, should not have a liability to Manx tax as credit would be given for the UK tax paid. Therefore, a UK inheritance tax exposure is removed at no income tax cost.