Should I set up a parent company?
Dividends up to a parent company are free of tax, and it can sell your trading company tax-free, but the money is then in the parent: getting it to you still costs tax.
Your answer
Enter your company's profit, the cash you'd move up and your income.
About this calculator
For one owner of a UK trading company (not a letting or investment business), with income tax at the England, Wales and Northern Ireland rates.
We work out the Corporation Tax of the company whose profit you give, and the tax on a sale. We don't work out what the holding company earns on its cash, or set-up costs.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
Dividends one company pays another are free of Corporation Tax. But companies you control share the £50,000 and £250,000 Corporation Tax limits, and a holding company that keeps cash counts as one of them (one that only passes dividends straight on doesn't). We work out your company's Corporation Tax both ways.
On a sale, a company selling at least 10% of a trading company it has held for 12 months pays no tax on the gain (the Substantial Shareholding Exemption). We compare that with you selling the shares yourself with Business Asset Disposal Relief (18% on the first £1m), then getting the money out of the holding company by winding it up or as dividends.
You'd set it up by swapping your shares for shares in the new holding company (a share-for-share exchange). There's no Capital Gains Tax on the swap, and HMRC can confirm that in advance (clearance).
Worked example
Your holding company could sell the trading company with no tax, against about £419,280 if you sold the shares yourself, but getting the money to you then costs about £419,280.
2026/27 rates · financial year 2026 · one owner · 1 trading company · sell in 5 years
| Your trading company's yearly profit | £200,000 |
|---|---|
| Corporation Tax without a holding company, the full limits (with marginal relief) | £49,250 |
| Corporation Tax with a parent that keeps cash, limits divided by 2 (25%) | £50,000 |
| Extra Corporation Tax a year | £750 |
| Cash moved up a year | £50,000 |
| Corporation Tax on the dividends up: exempt | £0 |
| Dividend tax if you took the cash yourself instead | £17,696 |
| Sale value in 5 years (all gain: shares that cost nothing) | £2,000,000 |
| Selling yourself: Capital Gains Tax with Business Asset Disposal Relief | £419,280 |
| Holding company sells: Substantial Shareholding Exemption | £0 |
| Then wind it up: Capital Gains Tax with Business Asset Disposal Relief | £419,280 |
| Or take it as dividends: dividend tax | £789,090 |
| Extra Corporation Tax over 5 years | £3,750 |
Worked out using HMRC's 2026/27 rates for dividends and Capital Gains Tax, and Corporation Tax for the financial year from 1 April 2026.
Questions people ask
Can I sell my company tax-free through a holding company?
The holding company can, if it has owned at least 10% for 12 months and the company is trading. But the money is then in the holding company. Taking it out costs dividend tax, or Capital Gains Tax if you wind the holding company up, so it mostly helps if you'll reinvest the money through the company.
Does a holding company protect my cash?
Cash moved up to it is no longer the trading company's, so the trading company's creditors can't reach it if it fails. The trading company can only pay dividends from profits it has built up, and moving money just before it fails can be challenged.
Will the holding company itself pay much tax?
Not on dividends from your trading company. On interest or other investment income it pays Corporation Tax. If it ends up mainly holding investments, for example after selling the trading company, it pays the 25% main rate on all its profits.
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