A holding company and a linked investment company for three young property businesses

Yes, and it is often easier to do early. With little trading history and low values, there is less gain to protect, simpler valuations and fewer questions for HMRC. A share-for-share exchange can insert the holding company without a capital gains tax charge if the conditions are met. Doing it before values grow also keeps the clearance application straightforward.

Companies set up at different times often have different numbers of shares. Putting each company on the same share capital, for example 1,000 shares each, makes the exchange simpler to document and the ownership easier to follow. It also reduces the risk of a mismatch in the proportions, which matters for stamp duty relief.

Share-for-share relief under section 135 of the Taxation of Chargeable Gains Act 1992 applies in one case where the company issuing new shares holds, or ends up holding, more than 25% of the ordinary share capital of the company it acquires. Exactly 25% is not enough. Taking 26% put the exchange just over the line, so that it could qualify for the relief.

It is a swap. The shareholders hand over their shares in the existing companies and receive shares in a new holding company in return. Where the conditions are met, section 135 of the Taxation of Chargeable Gains Act 1992 treats the exchange as not being a disposal, so no capital gains tax arises, and the original base cost carries across.

Share acquisition relief under section 77 of the Finance Act 1986 needs the new company's shares to be issued only to the old shareholders, in the same proportions as they held before. If the shareholdings are not mirrored, the relief is not available and stamp duty is normally payable on the transfer.

The step where the holiday-let company took 26% of the holding company's shares did not mirror the existing shareholdings. It changed who owned what, so stamp duty relief was not available. The earlier step, which inserted the holding company, did mirror ownership and qualified for relief. The cost was known and planned for in advance.

Yes. Here, one of the shareholders is a company, which holds a separate class of shares. Dividends paid to it by the holding company can be received without corporation tax if the conditions are met. The company can then keep the profits and use them for investment, rather than the money first being paid to individuals.

It is not a statutory term. We use it to describe a sister company, owned by the same person, that holds investments and also holds shares in the holding company. In this case, it was an existing company that already had a property business and was given a minority holding.

Separate classes let different shareholders take different dividends or rights. Here the holding company's shares were divided into A shares, held by the individuals, and B shares, held by the investment company. The classes can carry different dividend rights, so profits can flow where the owners want. The rights must be drafted carefully.

Clearance confirms HMRC agrees the capital gains treatment and the income tax position before anything is done. For shares issued on or after 26 November 2025 the capital gains test is whether the arrangements have a main purpose of avoiding tax. HMRC must normally reply to a complete application within 30 days.

Not any more. The furnished holiday lettings regime ended on 5 April 2025 for income tax and capital gains tax, and on 31 March 2025 for corporation tax. Holiday lets are now taxed as ordinary property businesses, so the reliefs that depended on the regime, such as Business Asset Disposal Relief, no longer apply in the same way.