What Is a Holding Company in the UK? Setup & Tax Guide

Definition

A holding company is also called the “Parent Company”. It’s a business entity that primarily exists to own shares in other companies, called subsidiaries.

What is a Holding company?

A holding company is a special kind of business. It doesn’t make or sell anything. Instead, it owns things like money, buildings, ideas, or parts of other companies. The main job of a holding company is to keep these things safe and separate from the businesses that sell products or do services. Many small business owners think only big companies use holding companies, but even small businesses can benefit from using one.

A holding company is like the brain of a business, it guides and protects its subsidiaries without directly operating them.

Holding company structure

Some of the smaller companies make and sell things; these are called operating companies. Others don’t sell anything. They just own stuff like buildings, cars, machines, or ideas that the other companies use. The big parent company (the holding company) can own all of a smaller company, or just own enough to be in charge, like more than half. Sometimes it doesn’t even need that much to be the boss.

Each smaller company has its team that takes care of everyday work, like selling, making, or fixing things. The holding company doesn’t help with little jobs every day. But it watches everything and makes big decisions, like picking the leaders or deciding if two companies should become one, or if one should close.

Function of Holding Company

Holding companies help their smaller companies in many important ways. One big job they do is taking care of money. They collect money from all the smaller companies they own and keep it in one place. This makes it easier to save, spend, or invest the money in smart ways.

They also help when it’s time to buy new companies or join two companies together. Because the holding company is in charge, it can decide the best way to grow the business. Sometimes, it changes how things are set up to make everything work better together and make more money.

Example: Sometimes, big companies use a different one than the one you know. That’s usually because they are a holding company.

Two types of holding companies:

 There are two basic types of Holding Companies:

1. Pure Holding Company

   
   It is established purely to hold shares or assets of other companies. It doesn’t conduct any other business operations, nor does it produce or sell anything of its own.

Example: If a company holds the shares of other companies but itself does not do any selling, it shall be called a Pure Holding Company.

Features:

• Has a mere ownership function
• Has management control
• Is insulated against business risks

2. Mixed Holding Company

It holds shares not only in other companies but also carries on business. One half acts as a holding, while the other half carries on the business activity itself.

Example: A company that owns some companies and also sells some of its products or services is called a Mixed Holding.
The concerned features would include: 

• It carries on business itself 
• It controls the subsidiaries 
• Its income is from diversified sources

Close investment holding company corporation tax rate:

A Close Investment-Holding Company (CIHC) is a special type of company that mostly holds shares or investments in other businesses. Its main goal is to help those investments grow over time and become more valuable. People who invest through a CIHC can also guide and support the businesses they invest in, helping them do well and succeed. A Close Investment-Holding Company (CIHC) always pays 25% Corporation Tax, no matter how much profit it makes. This means it can’t use the lower tax rate of 19% for small profits, and it doesn’t get marginal relief either.

The big news for many businesses is that corporation tax is going up. Starting from 1 April 2023, the main rate of tax is increasing from 19% to 25%. While this may be a surprise (or not!) for some of us who’ve seen changes before, it also means the return of some old rules, like the ‘small profits rate’, which will stay at 19% for smaller companies. But this lower rate won’t apply to everyone, so it’s important to understand who qualifies.

These changes were brought in by the Finance Act 2021, which brings back tax rules that were used in the past, with some updates.

What is a guarantee trust holding company plc?

Guaranty Trust Holding Company PLC (GTCO PLC) is a big company that works in many countries. It used to be called Guaranty Trust Bank Plc. Now, it’s a holding company that owns different financial businesses, like Guaranty Trust Bank and other companies that don’t do banking.

GTCO offers many services, such as everyday banking, investing, pension management, asset management, and payment services. It operates in Africa and the UK.

How to set up a holding company in the UK?

To set up a holding company in the UK, you need to register it as a private limited company with Companies House.

This means you’ll need to:

• Choose a unique name for your company
• Give a registered office address
• Appoint directors and shareholders
• Send in some basic documents, like the memorandum and articles of association

It’s a good idea to talk to an accountant or legal expert to make sure everything is done right, especially for tax rules and setting up the company in the best way.

Why Create a Holding company Uk?

You create a holding company just like you start any other business. One of the big benefits of setting up a holding company is that you protect your money and property.  It keeps the parent company safe from problems or debts that might happen in the businesses it owns.

 Real estate holding company names

Real estate holding companies in the UK typically manage, lease, or invest in property portfolios. These can include residential, commercial, industrial, or mixed-use assets. Many operate as REITs (Real Estate Investment Trusts), offering tax advantages and steady income streams to investors.

Berkshire Hathaway Holding Company​

These are the publicly traded U.S. stocks owned by Warren Buffett’s company, Berkshire Hathaway, as shared in reports to the U.S. Securities and Exchange Commission (SEC). Berkshire also owns shares in five Japanese companies listed based on reports filed in Japan.

As of September 30, 2023, Berkshire got permission from the SEC to keep some stock holdings private for a while. You can click on any column header to sort the list, and click again to reverse the order. Most of the data is from March 31, 2025, based on Berkshire Hathaway’s 13F filing on May 15, 2025. Some exceptions are:

• BYD – data from July 16, 2024
• DaVita – data from May 27, 2025
• Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo, data from March 17, 2025

For Japanese stocks, prices were converted to U.S. dollars from Japanese yen.

Positive point of holding company

A positive point of a holding company is risk separation; if one subsidiary fails, the others remain protected. It also allows for tax efficiency, as profits and losses can be balanced across entities. Another benefit is centralized control. That is, the parent company can guide strategy while subsidiaries operate independently. It enables easier capital allocation, letting profits from one business fund growth in another.

Negative point of holding company

1. Money doesn’t always go where it’s needed:
   When a holding company owns many businesses, it’s like having several wallets, but not being able to move money between them fast enough. For example, the furniture company might need cash to buy new equipment, but most of the money is stuck in the tech company. Even if the furniture purchase could make a good profit, the opportunity is missed because the money couldn’t move in time.
2. Trying to do too much at once:
   The people leading the company might be great at one type of business, like candy or banking, but they can’t be experts in everything. If they’re in charge of a candy brand, an insurance company, and a railroad, people may wonder if they’re doing all those things well.
3. It can get way too complicated:
   Running many businesses at the same time is like trying to watch 10 TV shows at once. It’s hard to keep track of what’s working and what’s not. With so much going on, important things can get missed.

Conclusion

A holding company can be a smart way to grow and protect your business, but it needs the right setup and planning. With strong tax benefits and risk control, it’s a structure worth considering, especially if you run multiple businesses or plan to invest.

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