Last updated: 2 Oct 2024
Meet Frank Flegg
Frank Flegg is the founder of Ethical Property Partners and owns over £20 million worth of commercial and residential properties. He transitioned from a secondary school science teacher to a full-time property investor and acquired 58 properties last year with just £50,000. Frank is also the founder of the Stepping Stone Housing Project, which has provided accommodation for over 350,000 people.
In this article, we’ll explore Frank’s insights on reducing taxes and structuring property investments for maximum efficiency. He discusses Stamp Duty, income tax, capital gains, and how planning can help you do more deals while paying less tax.
Stamp duty and land tax: What most investors don’t know?
Many property investors unknowingly overpay Stamp Duty. Frank revealed that if investors are purchasing six or more units, they can often apply the commercial rate instead of the residential rate, potentially saving tens of thousands in tax. He shared a personal example where he saved £49,000 by applying the correct rate. “I saved £49,000 in Stamp Duty just by going to the right person in my little black book,” Frank noted. This approach highlights how getting the right specialist advice can lead to massive savings. Frank emphasised that investors who follow traditional legal or accounting advice often miss these tax-saving opportunities.
Reducing income tax on property investments
With Section 24 mortgage interest restrictions, many investors struggle to reduce their income tax. Frank’s strategy involves setting up an SPV (Special Purpose Vehicle) to separate investment companies from trading companies.
This separation allows a trading company to charge professional fees to the investment company, which can make many expenses—such as travel and education—deductible.
For example, Frank explained that this structure could save £2,000 annually per property.
“The reality is, with the right structure, you can pay far less tax while making more profit—it’s just a matter of knowing where to look,”
This simple structuring tip gives investors more control over their expenses, leading to reduced taxable profits.
Planning for capital gains tax and inheritance tax
Frank stressed the importance of planning for capital gains and inheritance taxes early on. By doing this, investors can ensure they aren’t hit with unexpected tax bills later.
He shared a creative deal in Scotland where he and a client structured the purchase of 11 properties. This deal allowed them to pay the market value over 12 years, deferring a significant portion of the payment.
“We can structure our property investing to minimise tax—this is a case law that’s stood the test of time,” Frank emphasised, referencing Lord Tomlin’s famous dictum.
This long-term approach ensures that investors can control properties now and pay later, giving them a unique advantage in growing equity without an immediate financial burden.
Actionable tips
Maximise stamp duty savings
Always check if you qualify for the commercial rate when purchasing six or more units. This could save you tens of thousands in taxes.
Use a trading company to offset additional expenses
Set up a trading company to manage your investment portfolio and claim additional expenses that wouldn’t usually be deductible in an investment company. This can include items like travel and professional training.
Plan early for capital gains and inheritance tax
By planning from the start, you can avoid surprise tax bills and minimise your tax liabilities when selling or transferring properties.
Conclusion
Frank Flegg’s strategies offer clear, actionable advice for reducing taxes and maximising property deal opportunities. Whether you’re just starting or expanding your portfolio, these tax-efficient structures can help you grow faster while paying less tax.
Want to learn more from Frank Flegg? Watch his full episode on YouTube to discover how to save on taxes and close more deals in today’s market.
Additional Resources
Deal Finder's Corner is your weekly property talk show, proudly brought to you by Property Filter. Our mission is to equip you with the best resources by inviting expert guests to share the most up-to-date and effective strategies, tactics, and insights for finding and securing property deals across the UK.
