A holding company is a limited company whose purpose is to own shares in other companies rather than trade itself. Setting one up uses the same registration process as any limited company at Companies House, and digital incorporation costs £100 for the 2026/27 tax year — the same fee any trading company pays. There is no separate holding company application form.
The cost lands afterwards. A group is two companies, so it means two sets of annual accounts, two Company Tax Returns to HM Revenue & Customs (HMRC) and two confirmation statements to Companies House, each running on its own clock. Most directors also pay more in accountancy fees for that second set.
The mechanisms that make a group attractive — group relief for losses, and the Substantial Shareholdings Exemption on a future sale — are real, come with conditions, and usually need a specialist. For a single small trading company, the admin often outweighs them.
What is a holding company, in practice?
Nothing in company law creates a special species of company called a holding company. You register an ordinary limited company. It becomes a holding company because of what it owns: shares in, and control of, another company — the subsidiary. The subsidiary keeps trading, invoicing and employing. The holding company sits above it and holds the shares.
That distinction matters more than the label. Directors tend to picture a holding company as a shield that appears around the business. What actually appears is a second legal entity with its own directors, its own register, its own bank account and its own obligations to two different government bodies. The shield, where one exists, comes from assets being owned by a different company from the one taking commercial risk — and that separation only works if it is set up deliberately and documented.
So the honest first question is not "how do I set one up" but "what do I want to sit in a different company from the trade?" If the answer is nothing concrete yet, the structure has no work to do.
Check if setting up a limited company is right for you
Choose your limited company type
Choose directors and a company secretary
Decide who the shareholders are
Prepare documents agreeing how to run your company
Choose a name
Register your company with Companies House
Digital incorporation costs £100 for 2026/27, up from £50 on 1 February 2026, and is usually done within about 24 hours (Companies House fee change notice — figure checked 9 July 2026). The same £100 applies whether the company will trade or hold shares.
The part that turns a new company into a holding company is the step after registration: the new company has to come to own the shares in the trading company. Where the trading company already exists and has value, moving its shares upwards is not an administrative tidy-up. It is normally done as a share-for-share exchange, and it is the point at which HMRC clearance comes into the conversation. That is specialist territory, not a form you complete on a Friday afternoon — get it wrong and you can create a tax charge on a reorganisation that was meant to be neutral.
Thinking about the ownership question before you incorporate saves the most money. Our free guide walks through what incorporation does and doesn't cover.
What does running a group cost each year that a single company doesn't?
There is no group filing, and each company in the group still has its own filings: annual accounts to Companies House, a Company Tax Return (CT600) to HMRC, and a confirmation statement (CS01) to Companies House. Two companies means six filings a year on six deadlines, and the two regulators keep separate clocks — a Companies House deadline is not an HMRC deadline, and meeting one does nothing for the other.
Here is the same year, seen from one company and from a group of two:
Obligation
Single company
Holding + one subsidiary
Annual accounts (Companies House)
1
2
Company Tax Return, CT600 (HMRC)
1
2
Confirmation statement, CS01 (Companies House)
1
2
Around those filings sit the things nobody quotes for: a second bank account, a second set of statutory registers, intercompany transactions that have to be recorded on both sides, and the accountancy fees for preparing a second set of accounts. We're not putting a figure on that annual cost here, because it depends on your accountant and how much traffic runs between the two companies — but it is never zero, and it recurs every year whether or not the structure has delivered anything.
Each year-end is doubled too: bookkeeping closed off twice, balances between the two companies agreed on both sides, and two sets of figures for the directors to approve rather than one. Directors who go into a group expecting a one-off setup cost, and then meet that doubled compliance calendar in year two, are the ones who regret it.
If you want the filing calendar and the fees for a single company straight before you double them, start here.
What tax mechanisms make a holding company attractive — and why do they need a specialist?
Two come up constantly, and both are genuine.
The first is group relief. HMRC's Company Taxation Manual has a section on groups and consortia dealing with what can be transferred between group members and which companies may claim and surrender group relief (CTM80100, checked 14 September 2026). In outline: losses made in one company in a group can, subject to conditions, be set against profits in another.
The second is the Substantial Shareholdings Exemption. The Finance Act 2002 introduced an exemption regime for gains arising from disposals by companies of shares where certain conditions are met (HMRC Capital Gains Manual, CG53000, checked 14 September 2026). That is the mechanism behind the idea of a holding company selling a subsidiary without a corporation tax charge on the gain.
Notice the phrase doing the work in both: certain conditions. Ownership percentages, holding periods and what the companies actually do all feed into whether either regime applies, and none of that is a rule of thumb you can apply from a blog post. We're deliberately not printing the thresholds here. Get them from an adviser who has looked at your shareholdings, because the version you half-remember is the version that costs money.
Add the clearance point from earlier and the pattern is clear: the benefits of a group are real but conditional, and the route into the structure is the part most likely to go wrong. That is why the sensible order is adviser first, incorporation second.
When is a holding company the wrong move for a small business?
When there is nothing to hold. One trading company, no property, no meaningful cash reserves, no second venture planned and no sale on the horizon — a holding company adds a full compliance calendar and returns nothing, because the mechanisms that justify it have nothing to bite on.
It is also the wrong move when it is being used as a substitute for something simpler. Concerned about personal liability? That is what incorporation already does. Want to bring in a business partner? Share classes and a shareholders' agreement in the existing company may do it. Planning to sell in a decade? That is a live reason to take advice now, but it is advice you need, not necessarily a company.
And it is the wrong move when the timing is wrong. A group formed in a hurry, without clearance and without a reason you could state in one sentence, is expensive to unwind. The reasons that hold up — property to separate from trading risk, a second business with its own risk profile, a sale being prepared years out — are the ones worth paying an adviser to test.
We help directors get companies formed and connect them to partner accountants — we don't file your accounts or give regulated tax advice. If a group is genuinely on your horizon, speak to an accountant before restructuring rather than after. If it isn't, the better use of the next hour is making sure the company you already have is set up properly — which is what the guide covers.
Is a holding company more expensive to register?
No. Digital incorporation is £100 for 2026/27, the same as any limited company (Companies House, gov.uk).
Can a holding company file one set of accounts for the group?
No. Each company files its own annual accounts, its own CT600 and its own confirmation statement.
Does a holding company have to trade?
No. Its function is to own shares in and control its subsidiaries. The trading happens in the subsidiary.
Can I move my existing company under a new holding company myself?
The mechanics usually involve a share-for-share exchange and HMRC clearance. That is a job for a specialist adviser, not a DIY filing.
Will a holding company cut my tax bill?
Not by itself. Group relief and the Substantial Shareholdings Exemption apply only where specific conditions are met, and those conditions need checking against your circumstances.
A holding company is a limited company whose purpose is to own shares in other companies rather than trade itself. Setting one up uses the same registration process as any limited company at Companies House, and digital incorporation costs £100 for the 2026/27 tax year — the same fee any trading company pays. There is no separate holding company application form.
The cost lands afterwards. A group is two companies, so it means two sets of annual accounts, two Company Tax Returns to HM Revenue & Customs (HMRC) and two confirmation statements to Companies House, each running on its own clock. Most directors also pay more in accountancy fees for that second set.
The mechanisms that make a group attractive — group relief for losses, and the Substantial Shareholdings Exemption on a future sale — are real, come with conditions, and usually need a specialist. For a single small trading company, the admin often outweighs them.
What is a holding company, in practice?
Nothing in company law creates a special species of company called a holding company. You register an ordinary limited company. It becomes a holding company because of what it owns: shares in, and control of, another company — the subsidiary. The subsidiary keeps trading, invoicing and employing. The holding company sits above it and holds the shares.
That distinction matters more than the label. Directors tend to picture a holding company as a shield that appears around the business. What actually appears is a second legal entity with its own directors, its own register, its own bank account and its own obligations to two different government bodies. The shield, where one exists, comes from assets being owned by a different company from the one taking commercial risk — and that separation only works if it is set up deliberately and documented.
So the honest first question is not "how do I set one up" but "what do I want to sit in a different company from the trade?" If the answer is nothing concrete yet, the structure has no work to do.
Check if setting up a limited company is right for you
Choose your limited company type
Choose directors and a company secretary
Decide who the shareholders are
Prepare documents agreeing how to run your company
Choose a name
Register your company with Companies House
Digital incorporation costs £100 for 2026/27, up from £50 on 1 February 2026, and is usually done within about 24 hours (Companies House fee change notice — figure checked 9 July 2026). The same £100 applies whether the company will trade or hold shares.
The part that turns a new company into a holding company is the step after registration: the new company has to come to own the shares in the trading company. Where the trading company already exists and has value, moving its shares upwards is not an administrative tidy-up. It is normally done as a share-for-share exchange, and it is the point at which HMRC clearance comes into the conversation. That is specialist territory, not a form you complete on a Friday afternoon — get it wrong and you can create a tax charge on a reorganisation that was meant to be neutral.
Thinking about the ownership question before you incorporate saves the most money. Our free guide walks through what incorporation does and doesn't cover.
What does running a group cost each year that a single company doesn't?
There is no group filing, and each company in the group still has its own filings: annual accounts to Companies House, a Company Tax Return (CT600) to HMRC, and a confirmation statement (CS01) to Companies House. Two companies means six filings a year on six deadlines, and the two regulators keep separate clocks — a Companies House deadline is not an HMRC deadline, and meeting one does nothing for the other.
Here is the same year, seen from one company and from a group of two:
Obligation
Single company
Holding + one subsidiary
Annual accounts (Companies House)
1
2
Company Tax Return, CT600 (HMRC)
1
2
Confirmation statement, CS01 (Companies House)
1
2
Around those filings sit the things nobody quotes for: a second bank account, a second set of statutory registers, intercompany transactions that have to be recorded on both sides, and the accountancy fees for preparing a second set of accounts. We're not putting a figure on that annual cost here, because it depends on your accountant and how much traffic runs between the two companies — but it is never zero, and it recurs every year whether or not the structure has delivered anything.
Each year-end is doubled too: bookkeeping closed off twice, balances between the two companies agreed on both sides, and two sets of figures for the directors to approve rather than one. Directors who go into a group expecting a one-off setup cost, and then meet that doubled compliance calendar in year two, are the ones who regret it.
If you want the filing calendar and the fees for a single company straight before you double them, start here.
What tax mechanisms make a holding company attractive — and why do they need a specialist?
Two come up constantly, and both are genuine.
The first is group relief. HMRC's Company Taxation Manual has a section on groups and consortia dealing with what can be transferred between group members and which companies may claim and surrender group relief (CTM80100, checked 14 September 2026). In outline: losses made in one company in a group can, subject to conditions, be set against profits in another.
The second is the Substantial Shareholdings Exemption. The Finance Act 2002 introduced an exemption regime for gains arising from disposals by companies of shares where certain conditions are met (HMRC Capital Gains Manual, CG53000, checked 14 September 2026). That is the mechanism behind the idea of a holding company selling a subsidiary without a corporation tax charge on the gain.
Notice the phrase doing the work in both: certain conditions. Ownership percentages, holding periods and what the companies actually do all feed into whether either regime applies, and none of that is a rule of thumb you can apply from a blog post. We're deliberately not printing the thresholds here. Get them from an adviser who has looked at your shareholdings, because the version you half-remember is the version that costs money.
Add the clearance point from earlier and the pattern is clear: the benefits of a group are real but conditional, and the route into the structure is the part most likely to go wrong. That is why the sensible order is adviser first, incorporation second.
When is a holding company the wrong move for a small business?
When there is nothing to hold. One trading company, no property, no meaningful cash reserves, no second venture planned and no sale on the horizon — a holding company adds a full compliance calendar and returns nothing, because the mechanisms that justify it have nothing to bite on.
It is also the wrong move when it is being used as a substitute for something simpler. Concerned about personal liability? That is what incorporation already does. Want to bring in a business partner? Share classes and a shareholders' agreement in the existing company may do it. Planning to sell in a decade? That is a live reason to take advice now, but it is advice you need, not necessarily a company.
And it is the wrong move when the timing is wrong. A group formed in a hurry, without clearance and without a reason you could state in one sentence, is expensive to unwind. The reasons that hold up — property to separate from trading risk, a second business with its own risk profile, a sale being prepared years out — are the ones worth paying an adviser to test.
We help directors get companies formed and connect them to partner accountants — we don't file your accounts or give regulated tax advice. If a group is genuinely on your horizon, speak to an accountant before restructuring rather than after. If it isn't, the better use of the next hour is making sure the company you already have is set up properly — which is what the guide covers.
Is a holding company more expensive to register?
No. Digital incorporation is £100 for 2026/27, the same as any limited company (Companies House, gov.uk).
Can a holding company file one set of accounts for the group?
No. Each company files its own annual accounts, its own CT600 and its own confirmation statement.
Does a holding company have to trade?
No. Its function is to own shares in and control its subsidiaries. The trading happens in the subsidiary.
Can I move my existing company under a new holding company myself?
The mechanics usually involve a share-for-share exchange and HMRC clearance. That is a job for a specialist adviser, not a DIY filing.
Will a holding company cut my tax bill?
Not by itself. Group relief and the Substantial Shareholdings Exemption apply only where specific conditions are met, and those conditions need checking against your circumstances.
