UK HOLDING COMPANIES
The UK Holding Company is an ordinary company which falls within the scope of general tax law and therefore benefits from the double taxation treaties and the European tax directives.
The UK offers no reduction in the tax payable by the company on its income or on its capital gains. Nevertheless, no tax is levied on outgoing dividends.
For these reasons, the UK International Holding Company has several advantages in cases where there is sufficient credit for foreign taxes to absorb the UK corporation tax charged on incoming dividends.
A UK company can be constituted either as a private limited company (Ltd) or a public limited company (Plc).
The minimum share capital for incorporation of a UK company is £50.000 for a public limited company of which at least 25% must be paid up, but no minimum is applied to a private limited company.
A UK company is fully subject to tax at a normal rate of 26% which will be reduced to 25% from 1st April 2012, 24% from 1st April 2013 and 23% from 1st April 2014. The main rate of Corporation Tax applies when profits (including ring fence profits) exceed £1,500,000, or where there is no claim to another rate or where another rate does not apply.
Profits from £1 to £300,000 are taxed at a rate of 20% marginal relief is available for profits from £300,000 to £1.5M.
No capital duty is levied when capital is contributed at the formation of a resident company and on any increase in its capital.
Corporate income tax is charged on worldwide profits of companies resident in the UK and is calculated based on financial statements prepared according to generally accepted accounting principles.
Expenses incurred by the company must be only for the purposes of the trade.