Business Asset ProtectionHolding Company

A holding company can be used to hold the valuable assets of a business such as property, equipment and cash. It protects your assets, helps you share costs, and brings tax benefits to your business.

Why set up a holding company?

Ring-fence key assets of the business

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 the event of a legal claim against the company or a significant downturn in trade.

Sell the business tax free

Having 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%.

More Holding Company benefits

Tax relief for multiple businesses

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.

Inheritance Tax (IHT) reliefs

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 entire value of the group (including the investments) could be relived from IHT.

Shared costs

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.

Holding CompaniesHow they work

Nobody likes to think about worst case scenarios, but a downturn in trade may put your valuable business assets at risk.

A holding company allows you to ringfence these assets, protecting them from creditors and other liabilities that subsidiary companies may incur. It is a separate parent company created to own a controlling interest in a subsidiary company or companies.

A holding company does not necessarily trade itself; its main purpose is to form a corporate group.

Learn how Shorts has helped clients successfully set up a holding company

Holding Company Success Stories

  • McClure Timber Supplies

    "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"

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Holding Company FAQs

  • Why would I set up a Holding Company?

    Businesses acquire a range of assets over time which are either used in the trade, such as commercial property or plant and machinery, or have investments that have been made from surplus profits. There are associated risks connected with trading companies holding their own assets, but moving these assets into a holding company can minimise these risks.

  • How do you structure a Holding Company?

    Another company is inserted between the existing trading company and the shareholders, with the same shareholdings as in the trading company. With the correct structure, this new company can be inserted without incurring any immediate tax charges.

    The assets of the company are then transferred to the new company by way of sale or dividend. It is common for this to be tax free with careful planning.

  • What are the benefits of a Holding Company?

    As highlighted above, the main benefits of a holding company are:

    • Ring-fence key assets of the business
    • Sell the business tax free
    • Allow multiple businesses to benefit from tax relief
    • Allow the shareholders to benefit from certain Inheritance Tax reliefs
  • How long does it take to implement a Holding Company?

    As part of the process, we seek clearance from HMRC for approval for the transaction prior to implementation, so there are no surprising tax liabilities that arise. HMRC can take up to 30 days to give clearance, therefore the project will typically take between 4-6 weeks.