I am looking at buying a flat to rent in Manchester. My children (all under 18) have savings gifted to them some time ago by my now deceased father. I am considering whether to buy the flat in a limited company and issue shares to the children, to invest part of their savings in the flat to diversify their investments. My understanding is that each child would be liable for income tax on their dividends. However, am I missing any unintended tax consequences that make this a bad idea? 

Arthur Weller replies:  

In a company, the rental profits will be subject to corporation tax. Alternatively, if the children personally own the property, each child will have a personal allowance for income tax purposes of £12,570, which can be used against their third of the rental profits. However, if the children personally purchase the property, they will lose their first-time buyers' relief from stamp duty land tax.