Running a group

Each company prepares its own accounts, corporation tax return and confirmation statement, so there are more filings. The corporation tax limits are shared between associated companies, intercompany balances need to be tracked and reconciled, and dividends have to move through the group with proper approvals. A medium or large group may also need consolidated accounts. Your accountant will usually build this into the annual work.

Not if it's small. A parent company that qualifies for the small companies regime is exempt from preparing group accounts, although it can choose to. For financial years beginning on or after 6 April 2025, a group is small if it meets two of: turnover up to £15m net, balance sheet total up to £7.5m net, and no more than 50 employees.

The main ones are dividends paid up from a subsidiary to its holding company, loans between group companies, and charges for services or for the use of property. Each has different tax and accounting effects. Dividends from a controlled UK subsidiary are normally exempt from corporation tax, but they can only be paid out of distributable reserves, so the paperwork matters as well as the tax.

It depends on what you want the holding company to be. If it charges for services, it has its own business income, so it can't be a passive holding company and will count as an associated company for corporation tax. That may be fine if it employs staff or provides real services. If you want the holding company to stay passive, it should only receive dividends.

There's no single answer. Directors are often employed by the trading company, where the work is done and the costs belong. Some groups employ senior people in the holding company and recharge the costs. The choice affects payroll, corporation tax limits and how costs are shared. For sale reliefs, being an officer or employee of a company in the trading group generally counts.

Yes, and it's common, for example where the holding company funds a new subsidiary or a property purchase. The loan should be documented, with terms covering repayment and any interest. Intercompany loans are usually tax-neutral within a UK group, but how they're written off or repaid later can have consequences, so treat them as real loans rather than book entries.

Usually through success. Cash builds up, investments are made, a property is bought and let to outsiders, and over a few years the non-trading side becomes significant. HMRC treats non-trading activities above about 20% as an indicator of being substantial, looking at income, assets, expenses and time. Crossing that line can put sale and succession reliefs at risk, so review it regularly.

Meet, decide and record. The holding company's directors approve dividends received and paid, decisions about funding subsidiaries, investments and the group's strategy. Minutes and resolutions show that decisions were taken properly and by the right company. Good governance also supports the commercial reasons given for the structure, which matters if HMRC ever asks why the group is arranged as it is.

Yes. A holding company can hold a minority stake, for example in a joint venture or a business it is investing in. A company it doesn't control won't be a 51% subsidiary or part of its capital gains group, and won't usually count as an associated company. A sale of a holding of at least 10% may still qualify for the substantial shareholding exemption if the conditions are met.

At least once a year, ideally before the year end, and whenever something significant changes: a new company, a property purchase, a large cash balance, a new shareholder or the first sign of a sale. A review checks that cash and assets are sitting in the right companies, that the group is still trading for relief purposes, and that intercompany balances and dividends are in order.

It's usually straightforward once a holding company exists. The new company is formed as a subsidiary, so it sits within the group from the start. It will count as an associated company for corporation tax unless it is dormant, and if owned 75% or more it joins the capital gains and group relief group. Decide who will run it and how it will be funded.

Often in the holding company or in a separate investment subsidiary, rather than in the trading company, so the investments are kept apart from trading risks. That doesn't change the group-wide picture for the trading tests, because sale reliefs look at the group as a whole. The right place depends on the size of the investments, the plans for a sale and how profits will be extracted.

You can, but the tax treatment is much the same. A holding company owned by a few people is usually a close company, so a loan to a shareholder that isn't repaid within nine months of the year end can trigger a tax charge on the company, at 35.75% for loans made from 6 April 2026. There may also be a benefit in kind if the loan is interest-free.

The usual ones are how much to pay up from each subsidiary as dividends, whether any losses should be shared between group companies, whether cash or assets should move within the group, and how much to pay out to shareholders before the tax year changes. It's also a good time to check intercompany balances and whether the group still looks like a trading group.

Yes. Holding premises outside the trading company can protect them from trading risks and make a later sale of the trade simpler. But moving property within a group has its own tax rules, including possible clawback of stamp duty land tax group relief if the companies separate within three years, and degrouping charges if a company leaves the group within six years.