It’s not always obvious that even one company is a good thing but for those where it is the next question is often how many?
In no particular order think about the following:
– lenders sometimes insist that a lender is in a company on its own to protect their risk
– you should do risky things away from income producing assets (so developments away from BTLs)
– there is a VAT point per about having VAT and exempt activities can mean great recoveries in the same company (SA and BTL for instance) this means extra rules and complications due to the partial exemption rules – they’re messy and complex but can sometimes allow for more VAT recovery
– tax – more companies normally means higher tax rates as they all share the allowances
– cost – more companies means more accountancy fees, subscriptions, insurance policies and everything else
– exit plans – if you’ve building something to sell you might want everything in a nice bundle where there is nothing else in there that you want to keep.
– ownership – you don’t want to share assets and activity with someone who is only involved in part of your business
– loss offset – it can be easier to offset losses from a loss making activity (like early days of BTL) against profit making activities (like your trading company that funds the deposits from it’s profits)
– lending money – to yourself this is. From one asset rich company to another in need of deposits. Taking money out visa dividends can be expensive just to then put it back in to another company. Inter company lending can help.
– developments and VAT recovery – you can get lower VAT rates on works for certain developments but also recover the VAT on an eventual sale as well. Sometimes a new co is set up for the development specifically to then sell the final result to its forever home just to get the VAT recovery.
– marketing or presentation – if you have different brands or teams running things then you might benefit from having separation (watch for VAT aggregation though).
– watch for lenders rules – they don;t like properties moving around company groups and structures so once you have a company with lend you are often stuck and unable to move it without having to remortgage or risk breaching lenders clauses (like not changing the shareholders or directors of a company)
Not en exhaustive list by any measure so as always (especially after yesterdays message on underpaying on advice at the front end) seek advice!