Company Ownership by another Company

[TotalControl]

Just a bit of information for me here. Can one limited company set up by myself be owned by another limited company I own? If so, how would one go about it? Would, say, company A that owns Company B run all of its affairs? How would it work from a tax perspective? Just toying with ideas at the moment and assumed integration or affiliation of both companies would be easier for myself. If not then they can both remain separate.

[therealpigdog]

Yes, just issue/transfer all the shares to the top company. In terms of management it would still be run by the directors so no change there.

Eric will be along soon to explain the tax ...

[siscar]

It does make things more complex from a tax perspective, your corporation tax allowance is split between the companies as I am sure Eric will explain much more lucidly and accurately than I would....

[Eric Mc]

Yes.

In Corporation Tax regulations, the first £300,000 of profit are taxed at 21%. Profits over £1.5 million are taxed at 28%. Profits between those two bands rae taxed at an effective rate of 28.75%

When there are two or more associated companies, those thresholds are divvied up between the companies. If there are two companies, the thresholds would be halved, if three, they would be "thirded" - and so forth.

Depending on how the share ownership is arranged, you might be required to produce THREE sets of accounts - a separate set for the two companies plus a third set of "consolidated" accounts.

Doubling the number of companies will probably quadruple the complexity of your company affairs and bring about a substabntial rise in accounting fees.

[TotalControl]

Thanks chaps. Right, it's probably best to keep it simple. I just assumed the paperwork would be easier from a tax perspective as one company is controlling the others affairs. A parent company as it were.