We have inserted holding companies for a number of our clients to protect a range of assets, including property, plant and machinery, cash, intellectual property and investments, from the risks of a trading company. This can protect these assets from a legal claim against the company or a significant downturn in trade.
A holding company could allow the trading business to be sold tax-free. This works especially well if the shareholders do not need the cash on sale and would like to reinvest the proceeds. This could achieve a tax saving of between 10% – 20%.
Assets may be passed between subsidiary companies tax-free, which also allows for non-profit making businesses to surrender their losses to profitable companies to enable tax relief to be claimed quicker than otherwise possible.
Ordinarily, an investment company would not qualify for Business Property Relief; however, if an investment company is coupled with a trading company in a group structure, the group's entire value (including the investments) could be relieved from IHT.
There may be admin and central services functions that are utilised by different businesses. These can sit naturally within a holding company, which then makes charges to the subsidiaries so that the costs are shared appropriately amongst them.
"We sought advice on how to best tidy our companies up, and also on how to set up a holding company for the assets we held. Shorts were exceptional in creating a Holding Company for us and I’d have no hesitation in recommending them to any business needing to restructure in any way"
At Shorts, we regularly advise on the benefits of creating a group structure via a holding company.
The benefits include reduced risk, asset protection, sharing central service and admin functions between different businesses, and some tax benefits.
We have built a bespoke eligibility tool to help you determine whether a Holding Company is right for you and your businesses.
A group company structure is a business model in which a parent company, often referred to as a holding company, owns and controls a number of subsidiary companies. Each subsidiary is a separate legal entity, often with its own separate management and operations teams, but they are ultimately owned and controlled by the parent company.
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Holding Companies have become increasingly popular with business owners as they bring a multitude of benefits, including the ability to ring-fence assets, separating existing activities into group companies, bringing standalone companies into a corporate group, and preparing businesses for sale. But how is a holding company inserted?
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It is possible to use a Holding Company to both bring companies together into a single group, or to separate activities into separate companies. This can be useful, for example, to streamline structures or prepare all or part of a group for sale.
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