As businesses grow, owners often look for smarter ways to structure their companies; to protect assets, manage risk, and optimise tax. One effective option is creating a group structure, but like any strategic move, it comes with pros, cons, and important considerations.
At Brisan, we help businesses explore whether a group structure is right for them, from the initial setup to tax planning, restructuring, and HMRC clearances.
What is a Group Structure?
A group structure typically involves a parent (holding) company that owns one or more subsidiary companies. Each company within the group can have a distinct role; such as trading, holding assets, or managing investments all under a single ownership umbrella.
Common Types of Group Structures
- Holding Company with Trading Subsidiaries: The parent company holds the shares in trading businesses operating in different sectors or regions.
- Property-Holding Subsidiary: A separate company owns valuable assets (like property, machinery or IP), ring-fenced from trading risks.
- Centralised Services Company: One company provides support services (like finance, HR, marketing) to the group, improving efficiency and control.
Key Advantages of Group Structures
✅ Ring-Fencing Assets and Liabilities
Keeping valuable assets like property or intellectual property in a separate company can protect them from the risks associated with trading activities, such as legal claims or insolvency.
✅ De-Risk and Protect the Business
If one trading company in the group fails, the other subsidiaries and the holding company are insulated from direct liabilities providing protection for the wider group.
✅ Tax Efficiencies & Group Reliefs
- Intra-group Transactions: Certain transactions between UK group companies can be carried out tax-free, such as asset transfers, under specific conditions.
- Group Relief: Losses in one company can be offset against profits in another group company, reducing overall tax exposure.
- Tax-Free Dividends: Dividends paid between group companies are not subject to tax, allowing cash to be moved from a trading company to the holding company. Tax is only paid when dividends are distributed personally to shareholders.
✅ Centralised Control & Reporting
A holding company can centralise strategy, finances, and oversight across the group, with consolidated accounts giving a clearer overall picture.
Potential Disadvantages to Consider
While group structures offer benefits, they also come with added complexity and potential drawbacks:
- Increased Compliance Costs: Each company must file its own statutory accounts, tax returns, and maintain compliance, adding to admin and accountancy costs.
- Corporation Tax Complexity: The small profits rate for Corporation Tax (19% on profits under £50,000) is split across the number of associated companies, potentially pushing subsidiaries into the 25% main rate sooner.
- Trading vs Investment Activities: Mixing trading and investment (e.g. property letting or holding cash reserves) within the group can restrict access to certain reliefs like:
- Business Asset Disposal Relief (BADR) for Capital Gains Tax
- Business Relief for Inheritance Tax
Careful structuring and advice are essential to avoid unintended tax consequences here.
How Brisan Can Help
Setting up a group structure is not just about forming companies — it requires a clear strategy, tax planning, and HMRC compliance. At Brisan, we can:
- Advise on the best group structure for your business goals and risks
- Assist with HMRC clearance applications for tax-neutral transfers of assets or shares
- Support with restructuring existing businesses into a group structure
- Help implement consolidated reporting for clearer financial oversight
- Guide you on maintaining the right balance between trading and investment activities to preserve valuable tax reliefs
Thinking About a Group Structure?
If you’re looking to protect assets, manage risk, or improve tax efficiency, a group structure could be the right step — but it’s vital to get tailored advice before moving forward.
Get in touch with Brisan today to explore your options and build a structure that supports your business now and in the future.
