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(Source: Nationwide House Price Index April 2024)
If history repeats itself over the next 70+ years, the difference between the right and the wrong property ownership structure could make a difference of millions of pounds, even for investors who own just one rental property.
You may not be alive 70+ years from now, but there’s a possibility that your children will be and an even better chance that your grandchildren and great grandchildren will be.
We all have a moral obligation to improve the quality of our lives and those of our families.
That journey begins here!
Before meeting your Property118 Consultant in person, usually via a Zoom video conference, you will typically engage in email and telephone conversations. This aims to establish your current position, the challenges you are facing, and your short, medium and longer-term objectives.
Your Consultant will then work on a bespoke plan of action to present to you via a recorded video conference. These presentations typically last for around one hour, so you will have plenty of time to ask questions, either during that meeting or in subsequent email correspondence. You are most welcome to involve your existing professional advisers to participate, e.g. your Accountant, Financial Adviser, and mortgage broker. We actively encourage this.
The investment required to implement the plan will also be discussed and confirmed in writing.
At this point, the proposed action plan is very much provisional. It should not be regarded as professional advice.
If all parties are in agreement with the plan ‘in-principal’ your Property118 Consultant will then propose a fee to confirm the plan in writing and to ask the professional advisers we recommend for implementation to review it with a view adopting our recommendations as their own insured, regulated professional advice. If they agree to this we are then happy for you to proceed to implementation. If not you will be given the choice of receiving a refund of all fees to date or an amended plan of action and costs of implementation. If that is not acceptable the refund remains available.
A Family Legacy, Built on Expertise …
When Mr & Mrs A embarked on their property investment journey, they were determined to secure their financial future. But after seeing their grandparents’ estates hit with hefty inheritance tax (IHT) bills, they realised that success was about more than just accumulating wealth—it was about protecting that wealth for future generations. They knew a robust legal and financial structure, compliant with HMRC’s rules, was essential.
They couldn’t navigate these complexities alone, so they turned to a team of experts to build their Family Investment Company (FIC), ensuring it would meet both their commercial goals and HMRC’s compliance standards.
At the heart of Mr & Mrs A’s Family Investment Company was a share structure designed to balance control, succession planning, and tax efficiency, all while complying with HMRC’s requirements. The structure was key to transferring wealth to future generations without triggering immediate tax liabilities.
Here’s an overview of their share structure:
| Share Class | Owner(s) | No. of Shares | Value/Share | Voting Rights | Dividend Rights | Growth Potential | Purpose |
|---|---|---|---|---|---|---|---|
| A Class (Freezer) | Mr A | 380 | £1 + share premium | Yes | Yes | No | Allows Mr A to retain control and receive dividends, while freezing value for tax planning. |
| B Class (Freezer) | Mrs A | 380 | £1 + share premium | Yes | Yes | No | Similar to A class, but for Mrs A. |
| C to Y Class | Jointly owned by Mr & Mrs A | 10 per class | £1 | No | Yes | No | Designed for future gifting to family members who may become involved in the business. |
| Z Class (Growth) | Discretionary Trust for Mr & Mrs A’s bloodline | 10 | £1 | No | Yes | Yes | Growth shares held in trust, accruing value for future generations. |
The share structure was deliberately crafted to offer flexibility for wealth transfers while protecting control over the business. Here’s why Mr & Mrs A made these choices:
Establishing this FIC structure wasn’t just a matter of drawing up documents—it required the involvement of several professionals to ensure compliance with HMRC’s rules and to align the structure with Mr & Mrs A’s long-term goals. Here’s how each professional contributed:
The foundation of the FIC was built by Mr & Mrs A’s barrister, who drafted the necessary legal documents to ensure the structure was robust and compliant with both company law and HMRC guidelines.
The involvement of a STEP-registered solicitor was crucial for setting up the Discretionary Trust that would hold the Z growth shares.
The accountant played a vital role in ensuring that the structure met tax compliance requirements, particularly around Corporation Tax, Capital Gains Tax (CGT), and Inheritance Tax (IHT).
Securing the right finance for the FIC was another key piece of the puzzle. Mr & Mrs A worked with a specialist mortgage broker who understood the complexities of lending to Family Investment Companies.
The transfer of Mr & Mrs A’s properties into the FIC was handled by specialist conveyancing solicitors, who ensured that all legal aspects of the transaction complied with SDLT rules and company law.
Throughout the process, Property118 acted as the central coordinator, ensuring that all professionals worked together seamlessly.
By working with their professional team, Mr & Mrs A didn’t just build a company—they built a legacy that could withstand the scrutiny of HMRC and support their family for generations. Their Family Investment Company was meticulously structured to ensure compliance with tax law while allowing their children and grandchildren to benefit from the company’s growth.
If you’re looking to create a similar structure, Property118 can guide you through the process, helping you build a compliant and future-proof business.
To book an initial 60-minute consultation with a Property118 consultant, use this link.
