Holding Companie

[heartsol]

Hi

I own two ltd companies i would like to know what are the implications of using a holding companie as both business are operating

any advice would help

thanks

 

[Ozzy]

Hi,
Personally unless you have any specific dividend, organisational and/or tax investment reasons for doing so, don't bother.

Its more agro than its worth..plus.. if you ever sold one business you could be worse off if the money had to go to the holding company for you to then only be able to take out as drawings.

No tax would be payable by the holding company on the sale of its assett, but then you would have to pay the full tax rate for taking the money out of the holding company. Where as if you sold the company directly (no holding company) then your tax liability on the sale deminishes over time down to as low as 10% after 4 years trading I believe (I wait for an accountant to clarify this...)

 

[bwglaw]

I would suggest you seek advice both from a tax and legal point of view. I own a holding company and it is not so complex but that depends very much on what the other two companies are, how they are structured, any other directors involved etc.

Having a holding company works for me because the holding company owns 70% share in the sister companies. This allows me to appoint more Directors to run the sister companies but have no control over the holding company.

The legal implications are that if one of the sister company fails then the holding company may well be accountable for its liabilities but this depends how it is structured.

You havent really stated your intentions behind the thought of having a holding company and what your business is.

 

[Alpha]

then your tax liability on the sale deminishes over time down to as low as 10% after 4 years trading I believe (I wait for an accountant to clarify this...)

Close enough Richard

You would qualify from business asset taper providing that the owner of the shares that were being sold was either an officer or an emloyee of the company.

The individual would benefit from 75% taper relief after holding the shares for two years.

If the Individual was a higher rate tax payer he would then have his annual allowance of £8500 for 2005-6 before he would be taxed on the calculated chargeable gain at 40%.