Transfer from Sole Trade to OpCo/HoldCo/PropCo structure

[SpartanFD]

Hi

I'm looking at a business that currently operates from a site owned by the sole proprietor. As part of the go forward model, I will be taking a share in the company and coming on board. In doing this, I'm looking to incorporate the sole trade and create a relatively simple but tax efficient corporate structure.

Would the following work:

Create a HoldCo (owned 80% by A and 20% by B).
HoldCo owns shares in the newly incorporated OpCo.
The current proprietor transfers the assets from the sole trade to the OpCo and transfers the property to the HoldCo (CGT should benefit from Incorporation Relief).
HoldCo charges with rent/management fees to OpCo for use of the site (this reduces OpCos PBT).
OpCo distributes earnings upwards to the HoldCo.
HoldCo therefore receives rental income and dividends income each year. PBT is offset by depreciation of the property.
Dividends are then paid to A and B.

The key issue here for me is that the dividends will be taxed twice (i.e. once in OpCo before distribution up to HoldCo and again in HoldCo before being paid to A and B.

What is the best way of structuring this and what are the key tax implications? A lot of questions here but appreciate any help.

Best
SpartanFD

[bd6759]

There is no tax on dividends recieved by a company.
Depreciation is not a tax deductible expense.
The whole of the business needs to be exchanged for shares in the company.

[SpartanFD]

That just shows you how long it has been since I've looked at tax - completely forgot about the differences in TTP and PBT i.e. depreciation/dividends etc.

So back to the start then. We basically have a property which is owned personally by the current proprietor and a small sole trade. All things considered, the sole trade may just be terminated/wound up and we may start a new limited company without 'incorporating' the sole trade (we have a bunch of new ideas/products/suppliers/customers and so the business model will be very different). What is the best way to structure this? I was thinking about a propco, 100% owned by the current proprietor. Propco would hold 70% of the OpCo and also the property. I would then hold the other 30% of the OpCo which would pay rent etc up to the PropCo.

Our plan is to take small salaries and draw the remainder in dividends to reduce IT liabilities. Any thoughts?