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Personal investment companies

Including Financial Independence and Retiring Early (FIRE)
Charlottesquare
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Re: Personal investment companies

#357017

Postby Charlottesquare » November 16th, 2020, 1:12 pm

flyer61 wrote:A bit late to this thread. In 2002 on the advice of my accountant I set up a Limited Company which would specialise in investment properties. For IHT purposes the staring point was my children would each have an 8% stake in the business. The business has grown over that time and we are about to start gifting some of our shares to them as I can see the mother of all IHT bills when the Mrs and I are gone. An advantage of the Limited Company route is that my Wife has been a wage earner through it and this has allowed me to build a decent pension pot for her.

Subsequently my brother and I started a property joint venture in 2017 and again have used a Limited Company as the vehicle. My Company owns half the shares and his family trust the other half. Between us we have 7 children and this Company is with a view to any grandchildren we may have. So the property investing here is esoteric with an uber long term horizon.

It is probably time I took some professional advice about structure/ownership etc.


Yes, you really ought to have taken professional advice before you even created the company in 2002- starter for 10, how are you going to gift further shares to your children without tripping a personal CGT bill ?(given holdover will likely not be on point)

bluedonkey
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Re: Personal investment companies

#357028

Postby bluedonkey » November 16th, 2020, 2:16 pm

In my experience, complicated structures often end up incurring high admin/professional costs for limited return, plus clients often regret complicating their lives in this way. Just a general observation, not a comment on the specifics detailed in this thread.

flyer61
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Re: Personal investment companies

#357295

Postby flyer61 » November 17th, 2020, 10:34 am

Thanks Charlottesquare...cheered me up no end!

I'll report back.

Charlottesquare
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Re: Personal investment companies

#357340

Postby Charlottesquare » November 17th, 2020, 12:01 pm

flyer61 wrote:Thanks Charlottesquare...cheered me up no end!

I'll report back.


Sorry to be the bearer of bad news, the Taxes Acts do not favour property investment.

If you want to offload value to the kids without too much tax ask your accountant/solicitor about Freezer shares (Sometimes called Growth Shares)

In effect existing shareholders get granted these additional shares in ratio to their current ordinary holdings whose rights get varied (so no transfers of value) then these new shares ,which say only have rights to participate in future growth so have very limited current value get passed to kids, as this is a MV transaction this will be very limited. It does nothing to offload existing values inherent in current shares but at least prevents/reduces say future IHT issues re the value of the old shares getting worse.

https://www.property118.com/freezer-sha ... landlords/


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