Dividends from one company to another

Best way to transfer money from one company to another

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We have a design company which has made quite a lot of money, and we wanted to invest it in property. We want to move the money into a secondary ltd company for the purposes of this. Originally as i am a director of both i just thought we would loan it, but mortgage companies dont like this. I wanted to know if we can just make the property company a share holder in the design company and give the property company a dividend? Is there any tax to pay on that? is there a better way? Thanks for any advice.

 

Just for reference the reason for a second company is the mortgage companies will only lend to a compnay whose sole activity is property, not mixed.

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By David Ex
18th Mar 2024 14:59

jamesmw wrote:

We have a design company which has made quite a lot of money,

Well done! You can afford an accountant to advise you then.

https://find.icaew.com/

Other professional bodies are available.

https://www.accountingweb.co.uk/any-answers/how-to-use-any-answers

“If you intend to plan a course of action based on what you read in here, you should instead be taking professional advice.”

“They are not here to provide free accounting advice.”

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Replying to David Ex:
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By jamesmw
18th Mar 2024 15:29

I will be asking our accountants, but this could well be a common question with a yes/no(not this easy one again) answer, so i thought i’d ask. Also in the case it wasn't a yes/no answer, it can be nice to have some insight before speaking to your accountant so you can better understand their advice and perhaps ask further questions from a better informed position. But i guess i shouldn't have.

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Replying to jamesmw:
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By David Ex
18th Mar 2024 15:41

jamesmw wrote:

But i guess i shouldn't have.

Correct.

I will, however, keep your details so you can give me some free insights on design matters so I can better understand what my (paid) designer tells me.

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Replying to jamesmw:
By Ruddles
18th Mar 2024 16:00

It's quite remarkable, the number of people coming on here asking for a (free) second opinion before getting a first.

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Replying to Ruddles:
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By Jason Croke
18th Mar 2024 17:15

Ruddles wrote:

It's quite remarkable, the number of people coming on here asking for a (free) second opinion before getting a first.


Indeed, it seems the value is in the second (free) opinion rather than the paid for and fully detailed and understood first opinion.

I do appreciate that people want to have an idea before going into any meeting, if going in for say a medial procedure then you might well ask your Dr about risks but we'd also probably just Google that beforehand, but are we doing that to give ourselves comfort or to try and 2nd guess the Dr?

Googling before a Dr's visit, it can only really give you a rough steer, it's not a precise diagnosis based on your personal situation. Whilst wanting to have an idea of what to expect, it could also add to your confusion, you might read on Google that the operation carries a high risk of death (yes, but only in USA and to men over the age of 70 called Colin), so you end up going into your appointment focused on the negatives and asking questions about death rates when you should be listening to the Dr who is able to tailor their diagnosis based on years of experience and training. Google afterwards if you then want a world of varying opinion, but your first opinion is from your Dr who knows you best.

Much like trying to become a tax expert before meeting with an Accountant, your head is now filled with that scheme from the bloke down the pub or that Google said you don't have to pay tax and suddenly you are going into a meeting almost expecting to be given bad advice because you have already decided the best advice is that Google said "no tax", therefore the advice given by the Accountant "must be wrong and I need a 2nd opinion".

In summary, dangerous to go into a meeting on the pretence that a few hours of Googling makes you an expert as it may alter your expectation of the meeting if you don't get your "no tax" outcome as per Google.

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Replying to jamesmw:
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By Leywood
18th Mar 2024 16:04

If I found out (not difficult) that any of my clients asked on here or any other free forum/MDTP they would soon be an ex client for showing such disrespect.

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By Ruddles
18th Mar 2024 15:02

"which has made quite a lot of money"

Well, spend some of it on tailored professional advice.

EDIT - beat me to it again, David

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By Bobbo
18th Mar 2024 15:05

jamesmw wrote:

I wanted to know if we can just make the property company a share holder in the design company and give the property company a dividend?

jamesmw wrote:

Just for reference the reason for a second company is the mortgage companies will only lend to a compnay whose sole activity is property, not mixed.

One might say that the property company having a shareholding in the design company would make its activities "mixed" and not solely property.

How would the property company get the money to purchase a shareholding in the design company?

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Replying to Bobbo:
By Ruddles
18th Mar 2024 15:13

Bobbo wrote:
How would the property company get the money to purchase a shareholding in the design company?

Possibly no need. But that is one for the tailored advice referred to above ;¬)

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RLI
By lionofludesch
18th Mar 2024 15:16

[sigh]

It's not just that folk want free advice.

It's that asking one paragraph questions will get them good advice.

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By Paul Crowley
18th Mar 2024 15:23

Have you planned your exit route from both companies?

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By DKB-Sheffield
18th Mar 2024 15:25

jamesmw wrote:

Just for reference the reason for a second company is the mortgage companies will only lend to a compnay whose sole activity is property, not mixed.

Another bleedin' SPV! Likely HoldCo setup may be proposed next.

@OP... please discuss this - in full - with your accountant and/ or tax adviser and don't take accounting/ tax advice based on the views of a lender/ broker. I don't think you'd suggest your accountant should dish out design advice..., or that they should base design decisions on the answers to questions on a forum... would you?

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By Paul Crowley
18th Mar 2024 16:04

' Originally as i am a director of both i just thought we would loan it, but mortgage companies dont like this. '
Where did you get this from?
Have you asked if lenders will lend to a brand new company?

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