Inserting a holding company for an expanding tech business

A holding company gives the business a structure that can grow. New subsidiaries, including overseas ones, can sit beneath it. Assets can be kept apart from trading risk. Investors and buyers deal with one UK company at the top. Without one, a single trading company often cannot hold other group companies in a clean, tidy way.

Not where the conditions of a share-for-share exchange are met. The shareholder is treated as holding the new shares as the same asset as the old ones, so there is no disposal on the exchange and the original base cost carries over. It is usual to apply for HMRC clearance first to confirm the exchange is not caught by the anti-avoidance rule.

Not where share acquisition relief under section 77 of the Finance Act 1986 applies. The acquisition must meet its conditions, including bona fide commercial reasons, and the shares must be exchanged for shares only, in the same proportions. The relief has to be claimed, and the transfer must be adjudicated by HMRC, so it is not automatic.

A company with a single share is hard to reorganise cleanly. Allotting more shares first, for example taking one share to 100, gives the new holding company a sensible number of shares to issue in exchange. It also makes later changes, such as new share classes or new shareholders, simpler to carry out.

Yes. A holding company can be set up before the overseas companies are added, so long as it is designed to take them. Each overseas company can then sit under the UK holding company. Liabilities stay within each country's company, and a buyer can acquire the whole group by buying one UK holding company.

A buyer can buy the shares in the holding company, or the holding company can sell a subsidiary. If the conditions are met, the substantial shareholding exemption can make a sale of a subsidiary free of corporation tax on the gain. It generally needs a holding of at least 10% for 12 months within the six years before the sale, so timing matters.

For an exchange before 26 November 2025, section 137 of the Taxation of Chargeable Gains Act 1992 asked whether the exchange was for bona fide commercial reasons and not part of arrangements with a main purpose of avoiding tax. For shares issued from that date it is a main purpose test. HMRC must normally reply to a complete application within 30 days.

It often helps. Investors prefer a clear structure with one parent company and group accounts that show the whole business. A holding company also makes it simpler to issue shares to investors or employees at the top, without disturbing the trading company beneath. Your advisers should confirm any investor or lender requirements before you start.

It can be done, but the tax rules on settlements and dividends need care. Income from shares gifted to a spouse can still be taxed on the giver in some cases, and income from a parental settlement for an unmarried minor child is taxed on the parent above a small limit. A separate share class does not remove these risks. Advice should be taken first.

Alphabet shares are separate classes of ordinary shares, often called A, B and C shares. Each class can be paid a different dividend, so different shareholders, such as family members, can receive different amounts. The share rights must be drafted carefully, and the settlements rules need to be considered before dividends are paid.