What is a company?

A company is also a separate legal entity. A company has annual statutory reporting requirements each year and the company’s rate of tax is capped.

Shares are issued in a company and the people / entities who own the shares become the shareholders of the company. Directors are responsible for the company. The liability to shareholders is limited to the amount they have subscribed for their shares. Directors may be held liable for the company’s liabilities if they have traded insolvent or made personal guarantees on behalf of the company.

Company structure & what it means for tax?

Disadvantage of using a company is that the entity is not eligible to receive the 50% Capital Gains Tax discount on assets sold that were held for more than twelve months.

Any funds lent to shareholders or associates from the company will be treated as an unfranked dividend unless a loan facility agreement is in place.

The loan facility agreement will outline the repayment schedule and the interest payable to the company.