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What is the most tax-efficient way of setting up your company?

Question:

What is the best way to set up a company for your property business? How do you add your start-up capital to the business to get it back out of the business later whilst incurring the least amount of tax? 

Arthur Weller replies:  

Perhaps a good way to proceed is to set up the company with as many family members as possible as the shareholders, and make different classes of shares, so that different amounts of dividends can be paid out (but beware of the settlement legislation: see HMRC Trusts, Settlements and Estates manual at, Example 13. Then put in all the capital as a loan to the company, so that it can be withdrawn later tax-free. The lenders have a choice whether to charge the company interest. If the lenders comply with the conditions for 'allowable interest', they can get a deduction from their taxable income for the interest they have to pay to the bank for borrowing in order to lend on to the company. 

What is the best way to set up a company for your property business? How do you add your start-up capital to the business to get it back out of the business later whilst incurring the least amount of tax? 

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This question was first printed in Business Tax Insider in March 2021.