Very interesting stuff. Can you elaborate on how a holding company could initially be funded, please? I've heard terms like shareholder or director's loan used, but most information is USA based, if it matters. Any pitfalls with a foreign holding company being used for a UK based property limited company?
Funding into a hold co comes in various forms but two most common are: *Loan (directors or investors loan, technically repayable, may or may not have interest attached) *Share equity (payment for shares in the company, so not a repayable loan as such) The foreign holding question is too vast for a comment, but could be practical challenges.
Thanks Dan. Im a sole trader in the building trade and in the process of setting up a ecommerce business on the side. I want this to be a limited under a group structure as I also have aspirations to do property investment through another company in the future. Would it be ok to run the ecommerce gig through my current sole trader status then easily convert this to limited down the line if it is successful, declaring my holding company as the shareholder? I am thinking of setting up the holding now to plan ahead but not put any money through it.
You can run multiple sole trades, so technically yes ecom can be a sole trade. You can usually incorporate the trade into a ltd later. Biggest challenge is more practical at that point, like changing details to ltd with the marketplace. If you aren’t sure it’s going to pan out often a nice easy way to test the water. I guess on the holding company, given how quick they are to set up, do you really want one sitting there if you aren’t sure when you will use? You will still have annual filings to make etc.
Another helpful video . If trading company's annual profits were invested into the Holding Company with with view to buy property. What would be the correct model? Would the Holding Company own the shares in the Trading company or the other way ? What is the structure ?
I believe what you are describing is likely a dividend (of profits) being paid to the holding company (presume hold co owns shares in trade co). Said dividend is then used to buy property by hold co.
How does a holding company work in regards to tax? for example if my trading company paid my holding company dividends, my understanding is that dividends are only payable from profits IE after 19% corporation tax. Wouldn't my holding company have to pay this 19% on all the money earned again?
@@HeelanAssociatesthanks, dividends tax applicable when paying dividends out of trading Co to holding Co or is it just when you take out dividends from holding Co to shareholders?
I've just set up two companies, one for trading goods and the other for property development. I am going to send a substantial amount of cash to the property company to then purchase my first property. Would that be classed as a Director's Loan and, if so, would that be protected to an extent?
There are a couple of options, but it most commonly is seen as a directors loan. I wouldn't say its particularly 'protected' but it depends how you define protected I guess!
Hi, Just came across your video as I am looking into a Holding Co 3 questins if I may 1. Can retained profits be kept in a Holding Co indefinitely for ring fencing ? 2. I believe that only a dividend can be transfered up to the Hold Co,. Does this mean funds from a trading Co within the group can not be moved from the Co until the Corp Tax has ben paid ? Reason for asking, is to clarify that funds can't be ring fenced by transferring up until after each year end or until CT has been paid, which would mean that funds in the account of the Co are at risk during each trading year until the year end or CT is paid. 3. I presume having Trading co and investment Co within the same Holding Co would be a NO NO ? 4.Do you know the SIC code for a Trading Holding Co that would include a Pub Trading Co and Property management Co ?
Hi Stevie, Hard to answer all these in a comment and without more context, so in general terms: 1 Arguably yes 2 If you want to ring fence, dividends, otherwise you end up in loan position which is open to be being recalled 3 Its not ideal being in one, due to a few reliefs and/or VAT issues 4 There is no set specific, chose most appropriate
My dad, brother and myself have just moved our partnership business into two separate Ltd companies, with the intention of creating a third soon as we diversify. We have varied responsibilities between the businesses so trying to calculate a fair share of dividends to each of us from each business is complicated. I was thinking of setting up a holding company purely just to manage our salaries/dividends from one source, is this too much effort for no gain?
Hard to say here without full knowledge of your situation, but the holding company would effectively give you one pot of money to distribute. The challenge will be, if you had a pot of money in one place, can you still figure out how you want to carve it up into dividends?
Great info. I have a IT consultancy ltd company that has a good amount of cash reserve built up over the years. I want to diversify into Property. I was thinking of a holding company that would sit above my IT company & a newly formed Property investment company. Is there any pointers you can give me? Thanks
Hi Dave we can’t give specific advice here but can say it sounds like you are thinking about a potential strat, where you use a new company and get funds into it to invest. This one has lots of pros and cons and needs to be done in a certain way, so it’s a good one to seek advice on.
Hi. I'm buying a business so wouldn't pay dividends to holding company for the first 4 or 5 years. Would it be better to set up now to buy the company or restructure at the time?
Thank you, just 1 more please: can a company have more than 1 trade? E.g. the main trade and also an investing side. Which would make having a holding Co structure non beneficial. Thanks in advance
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Very interesting stuff. Can you elaborate on how a holding company could initially be funded, please? I've heard terms like shareholder or director's loan used, but most information is USA based, if it matters. Any pitfalls with a foreign holding company being used for a UK based property limited company?
Funding into a hold co comes in various forms but two most common are:
*Loan (directors or investors loan, technically repayable, may or may not have interest attached)
*Share equity (payment for shares in the company, so not a repayable loan as such)
The foreign holding question is too vast for a comment, but could be practical challenges.
thank you !
You're welcome!
Always useful videos 👍
Glad you think so!
Great info!
Glad it helped!
Thanks Dan. Im a sole trader in the building trade and in the process of setting up a ecommerce business on the side. I want this to be a limited under a group structure as I also have aspirations to do property investment through another company in the future. Would it be ok to run the ecommerce gig through my current sole trader status then easily convert this to limited down the line if it is successful, declaring my holding company as the shareholder? I am thinking of setting up the holding now to plan ahead but not put any money through it.
You can run multiple sole trades, so technically yes ecom can be a sole trade. You can usually incorporate the trade into a ltd later. Biggest challenge is more practical at that point, like changing details to ltd with the marketplace.
If you aren’t sure it’s going to pan out often a nice easy way to test the water.
I guess on the holding company, given how quick they are to set up, do you really want one sitting there if you aren’t sure when you will use? You will still have annual filings to make etc.
Another helpful video . If trading company's annual profits were invested into the Holding Company with with view to buy property. What would be the correct model? Would the Holding Company own the shares in the Trading company or the other way ? What is the structure ?
I believe what you are describing is likely a dividend (of profits) being paid to the holding company (presume hold co owns shares in trade co). Said dividend is then used to buy property by hold co.
How does a holding company work in regards to tax?
for example if my trading company paid my holding company dividends, my understanding is that dividends are only payable from profits IE after 19% corporation tax.
Wouldn't my holding company have to pay this 19% on all the money earned again?
Nope, hold co pays no tax on those dividends, they are usually not taxable in practical terms.
@@HeelanAssociatesthanks, dividends tax applicable when paying dividends out of trading Co to holding Co or is it just when you take out dividends from holding Co to shareholders?
Great vid. Thanks man
Glad you liked it!
I've just set up two companies, one for trading goods and the other for property development. I am going to send a substantial amount of cash to the property company to then purchase my first property. Would that be classed as a Director's Loan and, if so, would that be protected to an extent?
There are a couple of options, but it most commonly is seen as a directors loan. I wouldn't say its particularly 'protected' but it depends how you define protected I guess!
Hi, Just came across your video as I am looking into a Holding Co 3 questins if I may
1. Can retained profits be kept in a Holding Co indefinitely for ring fencing ?
2. I believe that only a dividend can be transfered up to the Hold Co,. Does this mean funds from a trading Co within the group can not be moved from the Co until the Corp Tax has ben paid ?
Reason for asking, is to clarify that funds can't be ring fenced by transferring up until after each year end or until CT has been paid, which would mean that funds in the account of the Co are at risk during each trading year until the year end or CT is paid.
3. I presume having Trading co and investment Co within the same Holding Co would be a NO NO ?
4.Do you know the SIC code for a Trading Holding Co that would include a Pub Trading Co and Property management Co ?
Hi Stevie,
Hard to answer all these in a comment and without more context, so in general terms:
1 Arguably yes
2 If you want to ring fence, dividends, otherwise you end up in loan position which is open to be being recalled
3 Its not ideal being in one, due to a few reliefs and/or VAT issues
4 There is no set specific, chose most appropriate
My dad, brother and myself have just moved our partnership business into two separate Ltd companies, with the intention of creating a third soon as we diversify. We have varied responsibilities between the businesses so trying to calculate a fair share of dividends to each of us from each business is complicated. I was thinking of setting up a holding company purely just to manage our salaries/dividends from one source, is this too much effort for no gain?
Hard to say here without full knowledge of your situation, but the holding company would effectively give you one pot of money to distribute. The challenge will be, if you had a pot of money in one place, can you still figure out how you want to carve it up into dividends?
Is there a way I can separate my paye earnings from my self employed
In what way? As an individual they are all 'your' earnings.
Great info. I have a IT consultancy ltd company that has a good amount of cash reserve built up over the years. I want to diversify into Property. I was thinking of a holding company that would sit above my IT company & a newly formed Property investment company. Is there any pointers you can give me? Thanks
Hi Dave we can’t give specific advice here but can say it sounds like you are thinking about a potential strat, where you use a new company and get funds into it to invest.
This one has lots of pros and cons and needs to be done in a certain way, so it’s a good one to seek advice on.
Could I set up a holding company for crypto 🤔🤔🤔
Yes, whether its a good idea is another question :-)
Hi. I'm buying a business so wouldn't pay dividends to holding company for the first 4 or 5 years. Would it be better to set up now to buy the company or restructure at the time?
Its hard to answer that without a lot more specific questions around the set up and your goals i'm afraid.
Are there any benefits of having the registered address in another country which has lower rates?
Not really as where your registered address is is not the prime factor in deciding where you will be taxed.
Thank you, just 1 more please: can a company have more than 1 trade? E.g. the main trade and also an investing side. Which would make having a holding Co structure non beneficial. Thanks in advance