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Where Taxpayers and Advisers Meet

Holding Company For Investments? Advice Please

barryevens911
Posts:1
Joined:Wed Jan 13, 2021 3:22 pm
Holding Company For Investments? Advice Please

Postby barryevens911 » Wed Jan 13, 2021 3:30 pm

Hi,

Looking for some advice.

I run a reasonably successful business, and have amassed 7 figures in profit in the business & I'm the sole director of the company with no other shareholders.

I wish to start investing in a variety of things to build my wealth, shares, stocks, etc - however I want to do this through a separate company, so the income is not mixed up with the daily ins/outs of my main business.

From a brief conversation with an accountant, he mentioned this would be a holding company. So I'd have my main company which runs my daily business, and then the holding company above that company would be for investments etc.

I just thought I'd post here for a little advice on how this all works, and what is best practice?

I asked my own accountant and they said this, please let me know if this sounds right?

If you wish to incorporate a new company as a certain % of shareholding, we can do so. You will then sell some of your shares to that company. That company can do investments from the dividend or loan that "existing company" makes to it.

If you and the other company are shareholders of "existing company", the dividend will have to be shared in that shareholding ratio each time you take dividend. But you can lend from "existing company" to the other company without making it as a dividend.

If you wish to only do sharedealing with "existing company" funds, you can of course open a new bank account for "existing company" where you can transfer some funds to start the investment process.


It would be useful if someone broke it down for me, as my accountant doesn't explain things too well.

Thanks in advance.

Lambs
Posts:1506
Joined:Wed Aug 06, 2008 3:15 pm

Re: Holding Company For Investments? Advice Please

Postby Lambs » Wed Jan 13, 2021 4:50 pm

B,

There's nothing to prevent you from personally owning 2 entirely separate companies, i.e., the new one has no direct relationship with your existing. Certainly, if you are intending to dabble in share dealing or anything particularly risky in New Co, I would absolutely NOT want that company also to own (say) 100 shares in my valuable original company, worth £x,xxx,xxx. Nothing wrong with a holding company also making SAFE investments, but for anything risky, it would be subsidiaries or separate. In other words, a third company as subsidiary to holding company, or even make an investing subsidiary company for your existing "old" company - in which case financed only by loans, not dividends.

But I am a tax person, not an accountant. You have an accountant already, so encourage them to help you understand. However, it's also January, so things are a little bit fraught.

With regards,

Lambs


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