Dividends, Parent Companies and Tax

[johndillon]

HI all,
Just have a question about dividends, taxes and parent companies.

I have a company, Parent Ltd, which is a dormant holding company. It is a 100% shareholder in another company, Child Ltd, which is actively trading and making profit.

Id like to pay myself a dividend (total of about £20k). So my question is, will there be a problem because Im not a direct shareholder in Child Ltd?

From my simple understanding of this, does it mean that Child Ltd would pay corporation tax on profit, pay Parent Ltd the dividend, Parent Ltd then pay corporation tax on that, and then pay me the dividend? In which case arent I being taxed twice and would I be better off becoming a direct shareholder of Child Ltd?

Many thanks for all advice and help,

John

[section 44]

Typically Parent Limited wouldn't be taxed on the dividend received from Child Limited.