Hi. Welcome back to our Pro Masterclass on property investment through limited companies with me, James Poyser. In this lesson, we're going to take a closer look at advanced company structures and tax efficient strategies. We'll also explore topics you might have come across in your research, like the pros and cons of using existing company versus setting up a new one, the property per company debate, and tactics for maximising your tax efficiency. Let's get started. It's common for us to help people who already have a limited company, perhaps for contracting or consulting. The first question they ask is where they can use their existing company for property investments, particularly if the company has profit retained in it. Whilst it might seem convenient, it's actually not advisable, and here's why. Lenders generally prefer to see a separate, dedicated company for property investments. They want to ensure that the financials of the property business are distinct from other activities. This separation not only makes the lending process smoother but also helps you manage your investments more effectively. Mixing different business activities within one company can complicate accounting, tax planning, and even your ability to secure financing for future property purchases. So if you're serious about property investment, it's best to set up a new and dedicated company specifically for that purpose. This will keep your finances straightforward and make it easier to scale your property portfolio. Remember with Provestor's low cost services, the cost of running another company is no longer a barrier. And if you do have profit in another company that you want to use for your property investments, you can do this. I'll tell you how in lesson five. Another common question is whether you should have one buy to let property per limited company. Some firms that set up limited companies on your behalf will insist on this approach, but at Provestor we believe it's not necessary and here's why. If you decide to sell your property in the future you can sell your limited company with the property wrapped inside it. By doing this, you're selling a company, not a property. This means the buyer will save on stamp duty land tax and the process, in theory, could be quicker. This is the main benefit of one property per company. You'll often find the firms that promote this approach tend to be real estate agents rather than tax advisors or accountants. It's important to understand there are significant downsides to this approach. The most obvious is cost. Maintaining multiple companies means paying for multiple sets of accounts which can quickly add up. You'll be handling separate tax returns, accountancy fees and insurance policies for each company, which can become a financial burden, especially as your portfolio grows. Not only this, but there's extra hassle too, particularly when it comes to bookkeeping. Many expenses are shared across multiple properties, for example, phone and IT costs, tools and equipment you might use to maintain your properties, and any subscriptions or professional memberships that you have. If you're growing your portfolio, one property might be turning a profit to fund the refurbishment of another. With multiple companies, you'll need to loan cash between the companies and keep track of which company owes what to what and balance the books. Bookkeeping quickly becomes a nightmare. At Provestor, we found that most of our clients prefer to hold multiple properties within a single company. This approach keeps things simple and cost effective while still allowing for flexibility in managing and growing your portfolio. So unless you have a specific reason to separate your properties like a planned sale in the near future, there's no need to set up a new company for each property. While you don't need a separate company for each property, you might need different companies for different strategies. For example, buy to let and property flipping are two distinct investment strategies that often require separate companies. Lenders prefer this because the financial profiles and risks associated with these strategies are different. Also, if you're planning on running a furnished holiday let business or commercial properties, it's worthwhile putting these in their own company, particularly if you have to register for VAT. If you already own property personally, you might be considering moving it into a limited company. This can be done but it's not always straightforward. Typically, you'll need to sell the property to your new company, which means that you could face both capital gains tax, CGT, on the sale and stamp duty land tax, SDLT, on the purchase. These costs can be significant so it's essential to weigh up the benefits against the potential tax implications. In some cases, the long term tax savings and other advantages of holding properties in a limited company might justify the initial costs. However, this is a decision that needs careful consideration and we recommend discussing it with one of our tax advisers to see if it makes sense for you and your specific situation and future plans. For those of you following a strategy of buy, refurbish, refinance, also called BRR, you might be wondering if a limited company is the right vehicle. The answer is yes. Limited companies can be very effective for BRR strategies, particularly because the tax efficiencies that they offer. That's because when you reinvest your profits into more properties, you're growing your portfolio without taking money out of your company, which can keep your personal tax liability low. Additionally, as your portfolio grows, the retained profits within the company can help you finance new purchases, making it easier to scale. Another question we often get is whether you can buy off plan properties or engage in build to rent projects through a limited company. The answer is a resounding yes. In fact, many developers today report that most of their units are purchased via limited companies. Developers are well set up to support limited companies and you'll simply need to set up your company before you sign the contract. If you're thinking about bringing in external investors to help fund the growth of your buy to let portfolio, a limited company is definitely the way to go. It's much easier to structure investment deals through a limited company as you can issue shares that reflect the level of investment and the control each party has. Our bespoke company structures are ideal for this as they allow you to create different classes of shares to meet the specific needs of your investors. For those of you living overseas, you might be wondering if a limited company is right for you, especially with the complexities of double taxation. The short answer is it's a complex area and the right approach depends on your specific situation. Double taxation treaties and international tax laws can significantly impact your investment strategy, so it's crucial to get tailored advice. We strongly recommend booking a consultation with one of our tax advisers to navigate these complexities. A key advantage of using a limited company is the control it gives you over your personal tax situation. If you owned buy to let properties personally, all rental income will be classed as income, which could push you into a higher rate tax bracket, potentially leading to the loss of tax free personal allowances, free childcare and other benefits. With a limited company however, you have more control. You can choose to retain the profits within the company as you grow and reinvest in your portfolio rather than taking them out as dividends. This means your personal income isn't automatically increased as it would be if you owned the properties personally. Finally, let's talk about some advanced tax efficient strategies. The key to maximising tax efficiency is to start out by clearly defining your goals. Are you looking to build a portfolio quickly? Are you planning for retirement or seeking passive income? Or are you thinking about passing on wealth to your children? Once you know your goals, you can structure your company accordingly. For example, if you're focused on long term growth, retaining profits within the company and reinvesting them into new properties might be the best approach. If you're thinking about retirement or succession planning, you might want to explore more advanced share structures, such as growth shares or freezer shares, to manage how the value is distributed among shareholders over time. At Provestor, we offer consultations with experienced tax advisers who can help you structure your company to meet your specific needs, and if you start your company with Provestor you'll get access to a pro masterclass designed to help you structure your company for maximum tax efficiency. So to recap, in this lesson we've covered advanced company structures, the property per company debate, how to use a limited company for BRR strategies and looks at why lenders and property developers prefer certain company structures. Overall, it's clear the decisions you make about how to structure your company can have a significant impact on your tax efficiency and the long term success of your investments. In our next lesson, we'll dive into how you actually set up a limited company for your buy to let portfolio. Thanks for joining me, and I'll see you in the next lesson.