The short answer: should a children's home group be one company or one per home?
One company per home, from the first home, is the structure most children's home owners should start with. The reason is not tax, it is that the three things a group lives and dies by all attach to the individual company: the Ofsted registration, the placement contracts with local authorities, and the value a buyer or lender would put on a single home. Keep one home in one company and each of those stays clean. Mix two homes into one company and you have tied them together in a way that is slow and expensive to unpick later.
There is a real cost to say out loud, and it is corporation tax. Companies under your control are associated, and associated companies share the thresholds that decide your tax rate, so a group of three homes in three companies pays more tax than one company earning the same profit would. That is the trade you are making: a bit more tax in exchange for homes that can be run, inspected, sold or closed one at a time. For most owners building a group that trade is worth it, and this guide shows where it is not. We are LOYALS, accountants for children's home providers, and we set these groups up for a living.
The one case where it changes is if a lender, a local authority framework or a buyer is already asking you to hold homes a particular way. If someone with the money is telling you the shape, that is the shape, and the timing is theirs rather than yours. Short of that, build it one home per company and do not wait for a second home to force the decision badly.
How does Ofsted registration work across a group of children's homes?
Every children's home is registered with Ofsted separately, and the company behind it is the registered provider. It is an offence under section 11 of the Care Standards Act 2000 to run a children's home without registration, and you complete one application for each home you want to open. Each home also needs its own registered manager, and a manager normally runs one home, so a group of four homes is four registrations and, in practice, four managers.
The registered provider is the legal entity, which means it is a specific company. That is the detail owners miss: Ofsted does not register "your group", it registers a named company as the provider of a named home at a named address. The standards that provider has to meet sit in the Children's Homes (England) Regulations 2015, and they bite on the company that holds the registration, not on some parent entity above it.
There is one exception worth knowing. A single registration can cover up to six children across up to four buildings, so a home that genuinely operates as one service over a couple of nearby houses can be one registration rather than several. The building addresses are fixed when the registration is granted, though, so you cannot quietly move a home or bolt a new house onto an existing registration later. A new location is a new application. Treat each real, separate home as its own registration and you stay on the right side of this.
Registration is not free either, and the fee follows the home, not the company. From 1 April 2026 the Ofsted registration fee for a children's home with three or fewer places is 2,006 pounds for the provider, and the annual fee runs from 5,390 pounds a home. Whether that home sits in its own company or shares one with another home makes no difference to the fee, which is the point: the cost and the compliance attach to the home, so the company boundary may as well match it.
Why one company per home is usually the right structure
Put one home in one company and three things get easier at once: selling a home, dealing with a problem at a home, and reading each home's own numbers. A buyer purchasing one of your homes buys the company that holds it, with its registration, its contracts and its track record, and leaves your other homes untouched. A serious issue at one home, a safeguarding claim or a contract dispute, is far less likely to reach across into the others when they are separate legal entities. And a local authority or a lender looking at a single home sees that home's accounts, not a blur of three homes netted together.
The structure that delivers this is a holding company sitting above one trading company per home, with the owner holding the shares in the holding company rather than in each home directly. If staff are shared across homes you may add one more company to employ them, which the next sections cover. The shape looks like this.
None of this needs to be heavy. Each home's company can run on the same monthly bookkeeping, the same payroll routine and the same year end, so the extra work is a second or third set of accounts rather than a different way of operating. What you are buying with that admin is optionality: the ability to sell, refinance, pause or close any single home without dragging the rest of the group through it.
Where does a holding company fit in a children's home group?
The holding company owns the shares in each home's company and holds the group's surplus cash, so the money you build up sits above the homes rather than inside the ones carrying the day-to-day risk. Dividends paid up from a home to the holding company are almost always exempt from corporation tax, so profit can be swept up and held safely without a tax charge on the way. You still pay dividend tax when you draw money out to yourself, so this is about protecting and positioning cash, not avoiding your own tax.
A holding company also gives you somewhere clean to hold property. Many children's home owners own, or want to own, the houses the homes operate from, and holding those in a separate company away from the trade keeps the bricks out of reach if a home ever runs into trouble. The holdco is the natural home for that too. The structure question for a care group, where CQC rather than Ofsted is in play, works the same way, and we cover it in our guide to the care group holding company and CQC registration. The general owner-managed version sits in our holding company guide.
What does one company per home do to your corporation tax?
It raises it, and it is worth knowing by how much before you commit, because every company you control is an associated company and associated companies share your corporation tax thresholds. For 2026 to 2027 the rates are unchanged: profit up to 50,000 pounds is taxed at the 19 percent small profits rate, profit above 250,000 pounds at the 25 percent main rate, and the slice between the two carries marginal relief at an effective rate of about 26.5 percent. Those two thresholds are what shrink.
One company gets the full 50,000 and 250,000 limits. Split into three homes in three live companies and the limits divide by three, to roughly 16,667 and 83,333, so far more of each home's profit is taxed at the higher effective rate. The mechanics sit in HMRC's marginal relief guidance, and the figures below show the small profits band falling as the homes multiply.
Two things soften this. A holding company that does nothing but hold shares is normally left out of the associated companies count, so it is the trading homes that matter, not the holdco. And children's homes rarely run at the kind of per-home profit where the top of the band is the main event, because the fees go back out as staffing. The extra tax is real, but for most groups it is a few thousand pounds a year against a structure that protects every home and every placement contract, which is why we still recommend one company per home and simply model the number for you first. This is the sort of thing our annual accounts and corporation tax service handles across the group in one engagement.
What happens when staff move between homes?
If your staff work across more than one home, a single company that employs everyone and recharges each home is usually cleaner than running a separate payroll inside each home's company. It keeps PAYE in one place, it keeps one set of contracts and one pension scheme, and the recharge to each home is a simple monthly intercompany invoice. Whether you need it is the one part of this that genuinely depends on your plans, and it is worth pausing on rather than guessing.
If each home keeps its own fixed team who never work elsewhere, you probably do not need a staffing company at all, and adding one is just another payroll to run and another associated company in the count. If staff float between homes to cover shifts, which is common as a group grows, the shared employer saves real mess later. So this is a decision to make once, when you can see how the staffing will actually work, rather than a default to copy. Get it wrong in either direction and you are either moving people between payrolls every month or paying for a company you do not use.
The intercompany charges that make a staffing company work do need to be documented and run properly, with a written recharge basis and the paperwork behind it, because HMRC expects charges between companies you control to be on a defensible commercial footing. That is bookkeeping done monthly, not a one-off form, which is another reason the finance side of a group is worth handing to someone who runs these structures rather than carrying it in-house as you grow.
What to do before you register the first home
The order matters more than owners expect, because the structure is far cheaper to get right at the start than to unwind once homes are registered and trading.
- Decide the shape before you apply. Set up the holding company and the first home's company before the Ofsted application goes in, so the registered provider is the company you actually mean to keep, not a placeholder you have to re-register later.
- Register each home in its own company. One home, one company, one registration, one manager. Resist the temptation to save a set of accounts by doubling a home up, because the saving is small and the cost of separating them later is not.
- Model the associated companies tax. Work out what the shared thresholds cost you across the planned number of homes, so you go in knowing the number rather than meeting it at the year end.
- Decide the staffing company deliberately. If staff will move between homes, set up the employing company now; if they will not, leave it out and keep the count down.
- Put the plumbing in from day one. Intercompany agreements, a dividend policy up to the holding company and clean group accounts all belong in place before the second home, not bolted on in a panic afterwards.
Build it this way and a second, third or fourth home is a copy of the first rather than a restructure, which is exactly what you want when you are also trying to register, staff and fill a new home. LOYALS is a King's Cross firm of accountants and business consultants that builds the company structure, the Ofsted registration forecast and the monthly finance function for children's home providers across London, and we would rather tell you to hold a home in the company you already have than sell you a group you are not ready to run.
If you run or are opening children's homes, our accountancy service for children's home providers covers the group structure, the Ofsted registration forecast, group corporation tax and the monthly finance function in one place, with fixed monthly fees.