SmartCo

Who would have thought, back in 1952 when an average property was worth under £2,000, that by January 2022 the average property value would have been £274,000? That’s the equivalent of an average property 70 years from now being worth nearly £38,000,000, assuming history repeats itself.

Given that Government have frozen the Inheritance Tax Threshold, a person who owns just one average property today could be storing up an Inheritance Tax liability of £millions for their grandchildren to have to pay before they are allowed to inherit just that one property. Ludicrous isn’t it?

Just to be clear, Inheritance Tax is 40% of the net value of your estate exceeding £325,000.

By the way, by the time your Grandchildren inherit it’s likely that your children will also have paid the 40% inheritance tax on the value of your estate too.

However, by cleverly structuring your company shares it is possible to accrue all future growth outside of your estate, meaning that when you die that growth isn’t subjected to Inheritance Tax, nor are those shares subjected to tax when your children, grandchildren and so on pass away.

This form of Tax Planning cannot be undertaken by Accountants, because it involves reserved legally activities such as redrafting the company rules registered at Companies House as well as drafting a Shareholders Agreement to ensure that HMRC’s General Anti-Avoidance legislation doesn’t come into play.

Back in 2019, HMRC was so worried about the loss of income to the Treasury that they created a “Special Investigation Unit” to look into what they termed “Family Investment Companies“. However, by Summer 2021 the unit was closed down on the basis of their own findings, which in simple terms confirmed that business continuity and legacy planning of this nature (if done correctly) is a perfectly legitimate form of financial planning.

Up until 2015, when Property118 and Cotswold Barristers formed a strategic alliance, the form of tax planning mentioned above was unaffordable to most UK private landlords. A discussion alone with a Barrister could cost several £1,000’s and the costs of implementation would often run into £100,000 or more. Nowadays, a Landlord Tax Planning Consultation with Property118 is priced at just £400 and comes with a guarantee of total satisfaction or a full refund.  The entire costs of implementation of what we have branded and trademarked as the “SmartCo” structure typically costs less than £20,000 to implement and also includes a full review of the other key forms of legacy planning including Wills, Discretionary Trusts and Lasting Powers of Attorney and their implementation where required. The costs, which can easily be financed for most people who should consider this planning, pale into insignificance when compared to the savings

If you already own investment properties and would like to transfer them into a structure of this nature, OR if you have a Limited Company already in place for to own your investment property that you would like to consider converting into this type of structure, we can help with that too.