Family Investment Company Vs Special-Purpose Vehicle (SPV) Company

Property investment is seen as another way to make money outside of investing in shares and if done correctly can help secure the financial future for many people. However, investing in property is not without its risks and you should ideally seek the advice of a qualified business professional or accountant.

To help secure and take away a portion of the risk with investing in property there are a couple of things you can do. Below we look at the benefits of setting up a Family Investment Company VS Special-Purpose Vehicle (SPV) Company.

Family Investment Company

So what is a Family Investment Company (FIC)? Well, it enables the family normally parents to retain control over any assets and accumulate wealth in a tax efficient manner and facilitate future succession planning. In some cases it can be used as an alternative to a family trust. Ideal for families with a property portfolio looking to keep money aside for their children.

What are the benefits?

There are many benefits to a family investment company including:

• Parents can pass wealth and assets to their children.
• The ability to retain control whilst giving up beneficial ownership.
• Asset protection.
• Inheritance tax (IHT) protection.
• Tax efficiency.

When should you set one up?

When it comes to property investment a FIC can be set up and used by individuals who would like to transfer value to family members (or other individuals) but retain some degree of control over the assets gifted and/or the access of the recipients.

Special-Purpose Vehicle (SPV) Company

The other company which can be set up for property investment is an SVP or Special-Purpose Vehicle Company. It is used as a way of holding property and other buy-to-let properties.

Many property investors with a solid buy-to-let portfolio and who rent out each month are able to hold multiple properties under one Special-Purpose Vehicle Company.

What are the benefits?

The benefits of setting up a Special-Purpose Vehicle Company include:

• The is an isolated financial risk
• Individuals can have direct ownership of a specific asset
• Tax savings implications
• Very simple to create, set up and maintain

When should you set one up?

Special-Purpose Vehicle Companies are set up as a limited company but they can also be set up as a trust or partnership. The set up process is very simple and involves going to the Companies House website or asking an accountant or business advisor who can help.

Speak to the experts

If you would like more information or help about setting up a Family Investment Company or Special-Purpose Vehicle (SPV) Company, then get in touch with one of the team here.

At the Stan Lee, our team of highly trained accountants, bookkeepers and business consultants can help you with all aspects of your business finances. We look forward to hearing from you.