Money left in Ltd Cy = what to do with it ?

Money left in Ltd Cy = what to do with it ?

Author
Discussion

nickfrog

Original Poster:

20,871 posts

216 months

Wednesday 30th July 2014
quotequote all
Wife and I are likely to finish the year with £15k or £20k worth of profits that we can't pay ourselves with in dividends as it would tip us both in the 40% bracket thingy. Or 32.5% Dividend tax thingy whatever.

We don't actually need that money. What shall we do with it ?

Can the Company pay it in a pension scheme ? How easy is it to set up ? I happen to have a personal pension scheme too, could the Cy pay into that ?

What's the more efficient way fiscally ?

Who should we speak to ?

Thank you !

PurpleMoonlight

22,362 posts

156 months

Wednesday 30th July 2014
quotequote all
Yes you can make pension contributions, or you could just leave it in the Ltd for the time being and pay the corporation tax on it.

birdcage

2,838 posts

204 months

Wednesday 30th July 2014
quotequote all
No need to pay corporation tax if you leave it in as working capital...

theboss

6,878 posts

218 months

Wednesday 30th July 2014
quotequote all
birdcage said:
No need to pay corporation tax if you leave it in as working capital...
How does that work? If it represents this years' net income then its taxable surely?

Eric Mc

121,773 posts

264 months

Wednesday 30th July 2014
quotequote all
Exactly, Corporation Tax is payable on the company profits. If there is £20,000 sitting in the company bank account, the assumption has to be that the company has made at least £20,000 in profits.

Has the factored in the 20% Corporation Tax bill that the company needs to pay on whatever taxable profits it did make?

red_slr

17,122 posts

188 months

Thursday 31st July 2014
quotequote all
Is there something the business needs, perhaps new equipment or such like?
Maybe something that you can use to improve productivity.
Items that retain reasonable value are also good as you can sell them if you require the equity back.
Depends on the nature of your business of course.
Have you spoken to your accountant?