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bigduckontax, Accountant
Category: Tax
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I run a UK LTD company and I want to invest my profits into

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I run a UK LTD company and I want to invest my profits into property. However I don't want to pay a personal dividend because I will end up paying a lot of tax and I would actually rather own the properties via a company.I was thinking that my UK LTD Company could become a subsidiary of a LTD Holding company. Profits after tax could be paid into the holding company via a dividend that wouldn't be liable for tax since it's a holding company, and then I could invest this money into another company which would be a property investment subsidiary of the holding company.Is this something that is possible to do and would it work?

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Firdtly, don't forget that the first 5K of dividends received by you are tax free from the 15/16 tax year.

Your proposal is perfectly feasible. Companies are not exposed to Capital Gains Tax (CGT) and inter company transactions within a company group are outside the scope of Corporation Tax (CT). In any event profits within companies in a group can be moved upwards, downwards or sideways as convenient to relieve profits in other group companies.

I do hope that you have found my reply of assistance.

Customer: replied 4 months ago.
Thanks that's very helpful - currently me and my wife own 50/50 shares in the existing company and are both directors.If we wanted to setup this new structure, would we simply become 50/50 shareholders of the holding company, and the holding company would be the shareholder in the current and future companies?

Correct, with two of you 50/50 of course you can have 5K of tax free dividends apiece.

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Customer: replied 4 months ago.
thanks!I will rate you now - cheers

Thank you for your support.