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How using a holding company can protect your business
30 April 2020
Putting shares in an existing company into the ownership of a holding company could provide substantial commercial and tax benefits.
the tax benefits of using a holding company
- If you’re in a situation where you may have to settle claims or debts from uncertain times of trade, then having a holding company could protect cash and valuable assets, such as property, by ring fencing them from such claims.
- If you’re undertaking new trading activity that carries an element of risk, then a holding company will allow you to keep this riskier activity contained and partitioned away from existing trading activity, whilst still being funded by it.
- Utilising a holding company and possibly a wider group structure allows you to ring fence certain assets to protect them from tax charges. For example, it’ll allow the movement of cash, tangible assets (e.g. property), and intangible assets (e.g. intellectual property) to different entities without incurring any tax charges.
If you have accumulated large cash deposits and own investment property, a holding company can be created, and a group formed to allow assets to move within the group.
Tax saving to be gained
If you exchange your shares in your trading company for shares in the new holding company, this will avoid a capital gains tax charge. Once in a group; group relief and the taxation of dividends received by companies means the movement of the property and cash is achieved without a charge to tax.
To put it simply, we’ll give you all the tax advice you need and we’ll organise all the necessary legal documents to set up the holding company and make the changes required to get the best tax advantages.