Also would have loved a more specific end screen CTA to ‘if you liked this video you should definitely check out this specific one here’ or even ‘I’ve put together a short playlist about BTL through a limited company click here for that’
With regards to your comment on making children directors and having no IHT to pay, this is only true if the actively trading subsidiaries (contracting/flipping companies for example) generate higher profit than the investment company that you hold your buy to lets in. Once your BTL company generates more than the trading businesses under the holding structure, it is classed as an investment holding company and subject to full IHT as there is no business property relief on investment companies, or entrepreneurs relief if you close it down. Gifting your shares to descendants 7+ years before you pass away is a way of avoiding IHT but obviously hard to predict when your time has come...!
@@MattBrighton Going through the process with my accountant now just for future planning which is the only reason I mentioned it. Scuffled my plans a bit considering my main focus is cashflow from the BTL business! I believe in the future you can always set up a FIC (Family Investment Company) above the holding company and pass assets on that way, so it should be fine in the end!
On the estate planning issue, are you saying the heirs should be directors only, or shareholders as well? I see how, being directors, they can make decisions right away, much like a trustee would. But if they are already shareholders, no shares will have to be inherited, thus limiting their personal taxes. Your thoughts?
please talk about active vs passive rental properties under a holding company. can a passive company under the holding still pass through losses? can the losses be passed to the other subsidiaries if the rental is passive?
It's the best way to do it - lenders also tend to be interested in what's known as the UBO - ultimate beneficiary owner so even if via a limited company if you're a sole director - they'll want to see your own statements and proof of funds.
At 4:46, you are loaning from your holding company to company B. Why not just issue extra shares in company B and have your holding company purchase them? Any advantage one over the other? The shares way seems neater to me.
I'd have to ask my accountant to help understand it. I do know that lenders might be a little bit funny around share ownership with hold co structures, so one thing to think about!
@@MattBrighton That doesn't make sense to me. As I understand it, the holding company owns 100% of the subsidiary anyway. Adding more shares won't increase the percentage.
@@deanbullen9021 Transferring the shares would in terms of selling part of the company - but would be all sorts of tax implications now it makes a profit
If you want to set up a limited company for property investing, can money in the limited company be used for buying further property without incurring income tax ? or do you need to transfer the money to a holding company ? Thanks for the great video
Not necessarily - you can loan money into the prop co and leave it there indefinitely, You could then recycle it into the next project, I'd ask my accountant on one detail I'm not 100% sure on though, but if profits were in the company, I'd likely try to reduce my profits by paying back the loan if that counts
I'm not 100% sure if, you make a profit for example of £30k and you had a £30k outstanding directors loan, does it count as a debtor on the balance sheet and wipe out taxable profit OR do you have to actually repay yourself and clear the loan - one for the accountants
Hi Matt, I’m currently doing exactly the above, however having push back from the bank as they don’t like the loan down from the holdings company being used for a deposit in the property company. I’d really appreciate if you could name some banks you’ve had success with mortgaging. Thanks in advance. Michael
You'd have to rely on a good broker here to help plug the gaps as that's what they'll be able to do best. They'll know who is the best lender for your structure
Lots of brokers about, but ensure they are knowleable and work with lots of property investors and developers - otherwiser they'll waste time and money
This is v useful
Also would have loved a more specific end screen CTA to ‘if you liked this video you should definitely check out this specific one here’ or even ‘I’ve put together a short playlist about BTL through a limited company click here for that’
Thank you! It’s nice to see a video on UA-cam in this field on something I haven’t seen before. Valuable information, thanks for sharing.
Fantastic video that taught me a lot about holding companies!
Another great video Matt... Thank you!
Glad you enjoyed it!
As always very helpful and this is exactly how mine are setup. Great video 👍🏻
@@MattBrighton Absolutely. And not many people are aware of it 👍🏻
You don’t have to a take dividend when other shareholders of company C do.
Best so far!!! Thank You!
Wow never heard of a holding company! Time to be educated!
Why not just invest with the company that’s earning the revenue?
Perfect video, thanks bro
Glad you found it useful!
Brilliant explanation. I learned a lot thank you!
With regards to your comment on making children directors and having no IHT to pay, this is only true if the actively trading subsidiaries (contracting/flipping companies for example) generate higher profit than the investment company that you hold your buy to lets in.
Once your BTL company generates more than the trading businesses under the holding structure, it is classed as an investment holding company and subject to full IHT as there is no business property relief on investment companies, or entrepreneurs relief if you close it down.
Gifting your shares to descendants 7+ years before you pass away is a way of avoiding IHT but obviously hard to predict when your time has come...!
That's really useful thanks! This is where my knowledge is sketchy on the exact ins and outs!
@@MattBrighton Going through the process with my accountant now just for future planning which is the only reason I mentioned it. Scuffled my plans a bit considering my main focus is cashflow from the BTL business! I believe in the future you can always set up a FIC (Family Investment Company) above the holding company and pass assets on that way, so it should be fine in the end!
Nice video Matt!
Amazing job!! 🤩
On the estate planning issue, are you saying the heirs should be directors only, or shareholders as well? I see how, being directors, they can make decisions right away, much like a trustee would. But if they are already shareholders, no shares will have to be inherited, thus limiting their personal taxes.
Your thoughts?
Hi mate. Great video. Which business account did you get for the holding company as Starling Bank doesn’t do holding companies.
Hi Matt, great video, do you have to have a different SIC code for this?
Yes - 64209
Great video
please talk about active vs passive rental properties under a holding company. can a passive company under the holding still pass through losses? can the losses be passed to the other subsidiaries if the rental is passive?
Good information
It sounds very useful ! But I am concerning if the lenders like the way you are doing ?
It's the best way to do it - lenders also tend to be interested in what's known as the UBO - ultimate beneficiary owner so even if via a limited company if you're a sole director - they'll want to see your own statements and proof of funds.
At 4:46, you are loaning from your holding company to company B. Why not just issue extra shares in company B and have your holding company purchase them? Any advantage one over the other? The shares way seems neater to me.
I'd have to ask my accountant to help understand it. I do know that lenders might be a little bit funny around share ownership with hold co structures, so one thing to think about!
@@MattBrighton That doesn't make sense to me. As I understand it, the holding company owns 100% of the subsidiary anyway. Adding more shares won't increase the percentage.
@@deanbullen9021 Transferring the shares would in terms of selling part of the company - but would be all sorts of tax implications now it makes a profit
You missed the extra corporate tax
If you want to set up a limited company for property investing, can money in the limited company be used for buying further property without incurring income tax ? or do you need to transfer the money to a holding company ? Thanks for the great video
Not necessarily - you can loan money into the prop co and leave it there indefinitely, You could then recycle it into the next project, I'd ask my accountant on one detail I'm not 100% sure on though, but if profits were in the company, I'd likely try to reduce my profits by paying back the loan if that counts
I'm not 100% sure if, you make a profit for example of £30k and you had a £30k outstanding directors loan, does it count as a debtor on the balance sheet and wipe out taxable profit OR do you have to actually repay yourself and clear the loan - one for the accountants
@@MattBrighton Thanks !
Hi Matt,
I’m currently doing exactly the above, however having push back from the bank as they don’t like the loan down from the holdings company being used for a deposit in the property company. I’d really appreciate if you could name some banks you’ve had success with mortgaging.
Thanks in advance.
Michael
You'd have to rely on a good broker here to help plug the gaps as that's what they'll be able to do best. They'll know who is the best lender for your structure
Lots of brokers about, but ensure they are knowleable and work with lots of property investors and developers - otherwiser they'll waste time and money
I work for a bank by day... blah blah blah.. 🙄
Everyone doesn’t want to pay taxes, but everyone wants something from the government. Crazy.
Great video
Glad you enjoyed it