I have 25% shares in Company A (a limited company) and 20% in Company B. I would like to transfer these into a holding company so that dividends are paid to the holding company, and I am only taxed on dividends paid out from the holding company and also for funding future companies from the holding company. Is the above correct in that the holding company structure will work and how do I go about doing this if I already have a holding company 100% owned by me (which is new and not holding any assets right now)? 

Arthur replies: 

You can certainly do what you are proposing. Using a stock transfer form, you can transfer your shares into the new holding company. If the shares are worth more today than when you originally acquired them, there will be capital gains tax (CGT) for you to pay. I presume that you are not going to charge your holding company anything for this transfer, so there will be no stamp duty for the company to pay (see HMRC’s Stamp Taxes on Shares Manual at STSM011010). There is a way of transferring which will not trigger any CGT, i.e., a share for share exchange if your new holding company will issue you with new shares in exchange for your shares in the existing company (TCGA 1992, s 135). However, this will only work in a situation where, as a result of the exchange, the purchasing company (in your situation, the new holding company) will hold more than 25% of the ordinary share capital of the target company (the company whose shares are being purchased). This does not appear to be the case in your scenario.