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This option is usually considered by one of two groups:
- A group of people already in the business together.
- A group of people wishing to form a company to hold property.
Regarding the first group, usually the accountant will recommend the formation of a new company rather than the main trading company holding property as part of its assets. The taxation reasons for this will be discussed with the accountant for each individual company.
Regarding the second group, the formation of a company is usually straightforward and is best conducted by the accountant. There are several areas connected with the setting up of a new company that need to be addressed and we have considerable expertise in these areas which we will be happy to offer free of charge to any potential clients.
Prior to taking either dividends or profits from their existing businesses to buy overseas property for themselves, company directors or partners should first consider the potential benefits of a separate limited company making the purchase rather than them, as individuals. Any funds introduced to the new limited company can be introduced under a directors loan account and therefore be returned at a later date with no liability to tax.
Existing co-directors, partners, colleagues, individuals, friends and relations may all set up a limited company. The appropriate amount of shares will be allocated to each individual according to the amount of funds invested. Providing the company manages the property correctly it will usually obtain Inland Revenue approval and appropriate tax reliefs accordingly.
There can be significant tax advantages in using a company to buy and manage overseas property. Shareholders may use the property themselves, saving on their personal taxation liabilities and their personal expenditure. Property portfolios may also be used to provide income in retirement for directors or partners that need not die with them, like a traditional pension, as it may we willed to others and therefore retained within their families.
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