How The Right Company Structure Can Save You £1 Million+ In Tax

In today’s episode, I break down one of the most overlooked parts of running a successful property business - how you structure it.

Most investors talk about yield, rent, and refinancing, but few think about what happens after they’ve made the money. Without the right structure, a huge chunk of your profits can disappear in tax - money that could have stayed in your business, been reinvested, and compounded into something far bigger over time.

I reveal how smart tax planning and business structuring can protect your assets, improve efficiency, and quietly build long-term wealth in the background. I’ll walk you through exactly how I’ve set up my own group structure, why it’s been a game-changer for my portfolio, and how you can start thinking strategically about your own setup - no matter what stage you’re at.

🎯 What You’ll Learn

• The critical difference between tax avoidance and tax evasion
• What a group structure actually is and how it works in practice
• Why separating your trading, management, and investment arms protects your assets
• The hidden flexibility a holding company gives you when raising finance or selling
• The most common mistakes investors make (and how to avoid costly restructuring later)
• Why getting specialist advice early can save you tens of thousands over the long term

If you’re serious about scaling your HMO business, keeping more of what you earn, and building true financial resilience, this episode is essential listening. Structure it right now and your future self will thank you.

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Transcript

Andy Graham (00:02.671)

Hey, I'm Andy and you're listening to the HMO Podcast. Over 10 years ago, I set myself the challenge of building my own property portfolio. And what began as a short-term investment plan soon became a long-term commitment to change the way young people live together. I've now built several successful businesses. I've raised millions of pounds of investment and I've managed thousands of tenants. Join me and some very special guests to discover the tips, tricks and hacks, the ups and the downs, the best practice and everything else you need to know to start, scale and systemise your very own HMO portfolio now.

Andy Graham (00:40.75)

Most property investors talk about yield and rents and refinancing. And of course they should because that is where the money is made. But what a lot of people forget is what happens after you've made the money. And if you're not structured efficiently, then a big chunk of this can disappear in tax. This is money that could have stayed in your business and been reinvested and compounded into something far bigger over time. 

In today's episode, I want to talk to you about how good tax planning and in particular, how structuring your business well can make a real and measurable difference over the long term. This is something that I've used to really great benefit in my own property business, and I want to make sure that you understand some of the options available. If you want to keep more of the money you're making, then today's episode is definitely one you want to stick around for. Let's get into it.

Hey guys, it's Andy here. We're going to be getting back to the podcast in just a moment, but before we do, I want to tell you very quickly about the HMO roadmap. Now, if you're serious about replacing your income, or perhaps you've already got a HMO portfolio that you want to scale up, then the HMO roadmap really is your one-stop shop. Inside the roadmap, you'll find a full 60 lesson course delivered by me, teaching you how to find more deals, how to fund more deals and raise private finance, how to refurbish great properties, how to fill them with great tenants that stay for longer, and how to manage your properties and tenants for the future. 

We've also got guest workshops added every single month. We've got new videos added every single week about all sorts of topics. We've got downloadable resources, cheat sheets and swipe files to help you. We've got case studies from guests and community members who are doing incredible projects that you can learn from. And we've also built an application just for you, that allows you to appraise and evaluate your deals, stack them side by side and track the key metrics that are most important to you. To find out more, head to theHMORoadmap.co.uk now and come and join our incredible community of HMO property investors.

Andy Graham (02:36.442)

So the first thing I want to say today is that I am not a tax expert. I am not qualified to give you any sort of financial advice, nor am I trying to. I simply want to make sure that you are aware that there are different methods of structuring your business out there that can help with your tax planning. And in the process of trying to give you some context on this, I'm going to explain how I run my property businesses to do just that. Let's start with something really important. OK, there's a big difference between tax evasion and tax avoidance.

Tax evasion is illegal, it's hiding income, it's lying to the revenue and sooner or later that will catch up with you. And I'm not saying that from experience because I've never done it, but I have seen examples of it and the revenue does not take prisoners. Tax avoidance on the other hand is perfectly legal. It's about understanding the rules and arranging your business in a way that keeps more of your hard earned money working for you. The government literally designs incentives for investors and business owners like us to use

Things like allowances and reliefs and structures. So if you're taking advantage of those, you're not cheating the system, you are just being sensible. And that's why this topic really matters because when you start treating property like a business, not just a collection of houses, how you manage and how you structure your business becomes a massive part of your financial results over a long time horizon. Now I want to give you some perspective here. Let's imagine that by structuring your business a little more efficiently, perhaps separating some of your trading arms and investment arms or setting up a management company, you could save an extra 10,000 pounds a year in tax that you are currently playing. 

Now, 10,000 pounds on its own might not sound like a life changing amount of money, but let's say you save that every single year and then you reinvest it back into your business, which is earning you a modest 10% return. After 25 years, how much do you think that that pot would be worth? Well, I can tell you the answer is roughly a million quid. That's a million pounds, not because you worked any hard and not because you found any more deals, not because you took any more risk. It's just compounded growth doing its job powered by money that you didn't lose to the taxman. And that's the whole point. Tax efficiency doesn't make you rich by itself, but it does help you stay rich. It keeps your capital compounding quietly working in the background while you focus on growing your own portfolio. So with this in mind, I would like to talk to you about some of the different ways that you can structure your property business.

Andy Graham (05:00.973)

Then I'll explain why I use a group structure. Now again, I am not a tax specialist. I am not qualified to give you any advice. So this is all just for something to consider and you must take proper financial advice. 

Now, why do I use a group structure? Well, there are a few different approaches to structuring property business and what is right for you will absolutely depend on what stage you are at and what your long-term goals look like and even some of your short-term goals. Now, some investors might go down a family investment company route, often when they want to involve family members or start planning for intergenerational wealth. Other investors might use something like a limited liability partnership, which can be really useful if you're working with partners and want flexibility, certainly around how profits can be distributed and shared. And there are hybrid setups and then there are things like group structures.

And that's what I'm going to focus on in today's episode because that's what I do. And after the advice that I took and the way that I run my business and I know that that's similar to the way that many of you guys run your businesses, that's just worked out the best for me and it has really helped my business grow. And I didn't know this stuff when I first started out. So what is a group structure? Well, in simple terms, a group structure means having a holding company at the top and one or more subsidiary companies underneath it. So each of those companies could do something different.

So let's take the hold co first of all. Let's call that Andy Holdings and that company ultimately receives the shares and the dividends of all of the companies beneath it that it owns or all of the shares in the companies that it owns. Now one of those companies might be a development company that might handle buying and developing and then selling flipping on some properties. So making just small chunks of money might also have a rent co., a business that owns my HMOs and some of my buy-to-lets and I hold them for the long term and they collect the rental income every single month and they own those properties. 

And perhaps I might also have a management company because I am managing my own properties and there are expenses and perhaps I'm managing the properties of a handful of other landlords as well because I'm really good at it and it makes sense. So you can see that I've got three different companies, three different SPVs, a development company, a rent company and a management company.

Andy Graham (07:22.575)

But all of those are owned entirely by my holding company and that holding company is owned entirely by me. I am the ultimate beneficial owner of the shares in the holding company and therefore everything underneath it. Now it's not unfeasible that you might own some shares for example in your development company under the holding company that you also share with somebody else. So perhaps you own the shares in the dev company 50-50. Well your holding company can hold your shares in your development company, 50% of them and your business partner may hold them in a slightly different way. 

He may or she may hold them in their own name or they may also own them in a separate company as well. But you can still have that sort of flexibility. Now everything here has a purpose and this sort of separation can give you some control and it can give you some clarity and a bit of protection. And what I want to do is just give you a bit of a rundown of some of the benefits and some of the cons as well. 

And then to keep it balanced. A bit of advice as to how you might try and interpret this for your own circumstances. And like I said, go and have these conversations with your own financial planner or your accountant or whomever gives you this sort of advice. So let's start with some of the pros and why this has worked for me. First of all, what I really like is keeping things in a limited structure. There is a certain amount of protection on the assets. This is a really important one, especially if you are developing and doing sorts of projects where there are inherent risks there are risks from a financial perspective there are practical risks people or somebody could get injured or hurt and Separating your assets can help just manage some of these risks now what it doesn't do is absolve you of the responsibility and liability if you are grossly negligent as a director and as a company owner or as a company something terrible happened then ultimately, anybody can come for you as the ultimate beneficial owner, whether you're a director, whether you are a shareholder, it doesn't really matter. It very much depends on what might have happened. And of course it is worth remembering that if you are taking loans from private investors or banks, then you are most likely personally guaranteeing those as well. And that personal guarantee will often extend beyond that company to which you are lending. So what that means is

Andy Graham (09:44.549)

If you perhaps write a loan for a hundred thousand pounds and you fail to pay it back and your personal guarantee kicks in that lender can pursue you as an individual, irrespective of the company or whether or not there are any profits in the company that they perhaps lent to, they can pursue you for it. So there are certain degrees of separation. It doesn't give you complete protection though. And rightly so. 

So for me, asset protection is a useful tool here, but it certainly isn't something that absolves you of all of these sorts of risks. So just be aware of that. Now, secondly, tax efficiency, which is largely what today's episode is about, of course. First of all, dividends can be hived up from all of your companies into your holding company. And that movement of money between the companies is tax free. Now, the companies themselves have to pay corporation tax. We'll come back onto that in a second.

And your holding company ultimately collects those profits after tax has been paid or after tax has been due. And for me, that's a really nice way to very systematically collect profits and pull them into one company, which I can then decide how I distribute it from. One of the key practical uses here is trying to extract money from one company where you have perhaps made a gain. 

If you want to take some money out, perhaps go and buy another property. How do you do that if that property is not going to be in that same company? So let's say you've made some money on one of your JVs, that JV is within your group structure and you want to take your share of profits out of that JV and move it into another company where you are perhaps going to buy another property. Well, if you don't have a group structure, you don't really have a choice, but to extract that personally and pay the personal income on it, which could be quite expensive if it's a large amount of money.

Or withdraw it as a direct loan which will obviously beat you back and if you keep hold of that for too long because your project that you buy maybe gets delayed, whatever, you could end up with an overdrawn direct to loan account and that can be very, very expensive. Indeed, the taxman will come down on you like a ton of bricks if that's the case. If you have a group structure, it's very easy just to take your profits from your JV company.

Andy Graham (12:03.187)

Hive your share of profits up to your holding company and then from your holding company send it back down to your other SPV where you want to buy this new property. That might be a convoluted way to try and explain it, but hopefully it's done the job. It's just a way of keeping your money in your company and avoiding to have to draw it down personally and pay money or risk a long-term overdrawn direct loan account. 

You can also offset profits in a group structure. So one company, for example, may make a loss, but another company in your group might make a gain. And you can offset that profit against that loss. And that's called group relief. So what that means is rather than paying a hefty tax bill in one company and nothing in another, because you've lost money in that one, you pay a smaller tax bill across the board because it takes into consideration what you've made and also perhaps what you've lost or what you haven't made. 

And again, that is a fantastic thing if you don't have a group structure you can't really do this sort of a thing and depending on how active you are as a property investor and how many projects you're balancing at any one time and what sort of risks you're juggling this can be a really really really sensible method of trying to keep as much money as possible within your business structure. An intergroup transfer can sometimes be exempt from stamp duty and capital gains tax as well so for example if within my holding company, I have one or two SPVs. Let's just call them limited property companies. 

If I want to move a property from company A to company B, as long as both of those companies are owned by my holding company, then there is no capital gains and no stamp duty to pay. There are a few circumstances where that might change, but generally speaking, that is the case. And of course you would always get this checked by your solicitor at the point of that transaction. The transaction still has to be recorded properly, but you are exempt, there is a relief on stamp duty and capital gains tax. 

Now, why would you ever do this? You might say, well, there are actually a whole number of reasons. And if you're in the earlier stages of building your property business, you may not necessarily need this sort of thing right now, but in the future you very well may need to do. Sometimes it might be because you are developing properties and you are splitting them into leases and you want to move properties from one company into another, because if you are

Andy Graham (14:28.199)

taking one freehold and dividing it and creating leaseholds. You can't do all of that within the same company. So you need to move it somewhere else. If that's within the same group, that's great. Perhaps you are going to do a business deal. Perhaps there could be some marital issues. You know, moving a property from one company to another company before paying capital gains or stamp duty. There's lots of different benefits like that that could kick in and could be used to your advantage. This is something that I use on a very regular basis as a developer and it saves us huge amounts of money - many, many, many thousands of pounds in capital gains and stamp duty, well into the hundreds of thousands of pounds. 

So this is certainly one of the benefits that you would want to take into consideration if you were thinking about this sort of structure or a structure for tax efficiency and for financial planning. Strategically, having a group structure gives you a lot of flexibility as well. If you wanted to sell or refinance one part of the group without disturbing others, then you can do that. can bring investors into a subsidiary without giving away control of your entire business, it just makes it easier to manage multiple activities, developments, rent to rent, SA's. You could do all of this under the same business group, but you could avoid muddying everything up because you can have different sets of accounts because you are operating different property businesses. 

But ultimately everything is finding its way up. All of the profits and all of the gains is finding its way up into your holding company, which is where your ultimate control is. And that's a nice way to be able to manage your business and be able to report from. Finally, long-term planning is a really key part of business growth. And if you're more so focused on short-term goals at the minute, that is absolutely fine, but I can guarantee that over time, your priorities will change a little bit as you get a little bit older, as you start to accumulate wealth, preservation of your capital and your wealth, becomes more important than the creation of new wealth. 

So long-term planning is really, really important. And that planning has to start earlier than later. If you're thinking about succession and legacy or even the potential sale of part of a business or a group, that structure will make it much simpler, much easier for you. Now, not in every single circumstance, but certainly there are examples and scenarios where that would be easier for you. So the upside, there are many of them, but like anything in

Andy Graham (16:51.933)

property there's no free lunch then there are definitely some downsides to be aware of as well. And this is the case with the various different types of structures that you might look into. Let's talk about some of the drawbacks and the real world limitations though of a group structure. The first big one is admin. The more companies you have the more accounts that you have the more reporting that you've got to do the more paperwork that you've got to do the more confirmation statements that you've got to do the more filing and payments money you've got to spend on accountants as well.

Now you will need a very good accountant who actually understands how your entire property business works and that is going to cost you some money. So you can probably start to see that there may be a point in time when it doesn't completely make sense to do this because you're not quite at the point where economically it makes sense. You're to spend a bit more than you really would like to. But if you don't put it into place, then you're going to get to a point further down the line, when actually it's going to be more expensive to try and create that sort of a group structure and unwind all of this stuff if you've been doing everything through a single company. 

It can get quite complex as well. You've got to be crystal clear on how money moves between companies, loans, dividends and management fees and make sure everything is done properly for tax purposes. The way that I do this is I run all of my companies through zero accounting software and they are all accounted for very, very accurately. If one company sends another company some money that is always reconciled in both of the zero accounts and they should always match up and periodically my accountant will review all the sets of accounts so they'll make sure that there are no anomalies or mistakes and they just make sure that all of the money and all the movements of money have been properly accounted for and that's incredibly important. 

So a group structure isn't automatically better it's just about using the right tool for the right stage of your business but if you are holding a couple of properties. Now, my advice would be to keep things simple. You don't need more than just one simple SPV. And if you are the ultimate beneficial owner of that SPV, that's fine. That's great. But as you start to accumulate more properties and perhaps as you start to set up all the businesses and other income streams, then it might make sense to start building in an extra layer, which yes, does look like complexity, but actually can start to.

Andy Graham (19:15.197)

provide you some of the benefits of financial planning, tax efficiency, and all of that jazz that we've been talking about in today's episode. And that brings us neatly on to when a group structure is actually worth it. 

Now for most investors, it starts to make sense. I think when you're scaling beyond three to five properties and certainly when you are adding complexity, when you are adding those multiple trading arms, joint ventures, partners, outside investors, maybe you are building or developing properties out and you need to be able to create leases and freeholds and move things around flexibly to better manage big taxes like capital gains. It's also a good fit for you if you are thinking long-term, if you want to build something that eventually has a huge amount of value, but can be selectively, I suppose, disposed of. 

So for example, if everything you did and every property you owned was all within one SPV, that could be quite a complicated sale to somebody in the future if you've got a handful of properties in the northeast and then load in the southwest and you've got some HMOs and some buy to lets and some SAs in there, that's quite a complicated business and it's not going to be very attractive to anyone. 

However, if you had one company with all of your buy to lets in the northwest and maybe one company with all of your serviced accommodation and maybe one company that was handling all of your property management and collecting all of your expenses and keeping a very nice tidy accounting record of all of your income and expenses from a managerial perspective, that's going to be much easier to put in front of somebody and organize a sale. 

And the great thing is there are lots of benefits of selling properties through limited companies if you can, obviously. If you're selling properties in a personal name, capital gains, things like that, it can be quite expensive, but there are some reliefs if you sell the shares of a company to a buyer as opposed to quite simply selling a property outside of a company to buyer. But of course you can only really do that if you've got your company set up and structured in the right way and it's an attractive purchase for somebody. If everything's mixed up it's going to be very very difficult for you to do that. So if you are thinking long term with that sort of stuff in mind then you can probably see how this kind of thing could be really really really beneficial.

Andy Graham (21:36.506)

over the mid to long term. But my advice is as follows, do not copy somebody else's diagram. Don't copy my diagram. Build a structure that suits your goals. You need a clear tax strategy before setting companies up. So to tick both of those boxes, you really do need to go and get financial advice. If you are at the earliest stages, that's fine. Now is the time to get that advice, even if you don't do anything with that advice just yet. If you wait too long and you build a complicated structure, it can be very expensive and very time consuming to engineer something like a group structure back into place. That is what I had to do. You have to go and get permission from the revenue, you have to get clearance, you have to write to them, you have to disclose lots of things. They can ultimately say no. And it's all a bit of a faff. The earlier you can do it, if it's the right thing for you, the better. I would also advise that you do keep it simple for as long as possible. I would actually advise that you keep everything as simple as you can for as long as possible. 

Sometimes offsetting some additional admin by having extra sets of accounts and some more accounting fees over the complexity of having all of your properties and everything kind of running through one company that is probably worthwhile if you're approaching that sort of stage in your property business. Do make sure you work with specialists, accountants, tax advisors, and they really should be in the property sector as well. I have heard people working with accountants that are not specifically interested in property and I think that they have potentially been given some bad advice that has turned out to be very expensive to retrofit afterwards. 

Finally, just make sure you are reviewing your structure every few years as your business grows. What made sense earlier on might not necessarily be optimal later. And that is really, really important. So there we go guys. Look, the real money in property is made by buying well, adding value, forcing it through refurbishments, managing properties, doing all of that good stuff, but keeping your money is just as important and smart structuring, it won't make you rich overnight. It'll cost you a few quid just to get it set up, but it will quietly protect and compound your wealth in the background. 

And as I have often said on the podcast, playing the long game is how you win in this industry. So look, if you've been meaning to get your structure reviewed, do it now, take the time, go and find the right person to do that for you.

Andy Graham (24:04.113)

Speak to your accountant, speak to a tax advisor, think about your long term goals, really make sure you understand what your current long term objective is and make sure you've got things set up in the right way. That is it for today's episode guys, thank you so much for tuning in. I hope that this has helped you. Remember, again, I am not a tax advisor, I am not a financial expert, I am not qualified in any way, shape or form to give you financial advice, so don't take it from me. This was just food for thought, bit of context and hopefully a little bit of an insight into how I run my property business. All I can tell you is that it works very well for me. 

I have saved many, many, many, many, thousands of pounds on tax because I've got the right structure in place and it gives me a huge amount of flexibility. So it's definitely the right thing for me, but make sure you can go and get the right thing in place for you. Now, if you are investing in HMOs, if you are scaling up your property business, then head over to thehmoroadmap.co.uk right now and go and get your hands on everything we have got inside there. I can guarantee if I had access to that when I was getting started, I would have achieved 10 times the amount in a 10th of the tire. And I know that that is a big claim, but that is how much value is waiting for you inside. Go and unlock it now, thehmoroadmap.co.uk. Trust me, you will not be disappointed.

If you want to discuss anything that I have brought to your attention in today's episode, then come on over to the HMO community. That's our free group in Facebook. Over 10,000 of us now all investing in HMOs at all sorts of stages, all over the country and in fact all over the world. It is a great place to come and share ideas, find support, guidance, advice, motivation, enthusiasm, just a shoulder to cry on if that is what you need, a soapbox to vent, whatever it is you need, we are there for you. So it's just a great place to come and hang out if you are actively investing or thinking about investing in HMOs. That's it guys. Thanks again for tuning in and don't forget that I'll be right back here in the very same place next week. So please join me then for another installment of the HMO podcast.