where to deposit Ltd company cash?

[StangGT]

Hi folks,

A Ltd company I am involved with has a 6 figure sum sat with a high street bank earning precisely nothing in interest.

Is there anywhere we can put the money that will at least earn us a bit of interest?

We need relatively quick access to the cash, but maybe we could lock half of it away for say 6 months and the other half for 3 months.

Maybe peer to peer lending?

Many thanks

[trickywoo]

The government bank deposit guarantee applies to business also so to be 100% safe you shouldn't have more than £75k with any one bank.

Interest rates are pretty poor for business accounts generally by Santander pays a little.

Using company funds for investment is quite a complicated area so go in with your eyes open.

Have you used your full personal allowances? If not you may be better off distributing the company money and investing it personally making the most use of them first.

You probably won't earn enough in peer to peer to worry about it but if a company starts making lots of money through investments HMRC may want to treat it as an investment company rather than a trading one.

[Eric Mc]

Be careful about where you put any surplus funds. If you put it into an account that it is NOT in the name of the company, you will be technically withdrawing money from the company for personal use - and you will therefore be triggering an Income Tax charge and perhaps an NI charge as well.

[Oscarmac]

We found ourselves in the same position a couple of years ago. We bought a house. The company had no need for the money in the med to long term so it wasn't a problem tying it up for a bit.

Been very fortunate to get planning permission for another house on the land so have effectively got the original one for peanuts.

[StangGT]

Thanks guys,

all useful stuff...

Eric, we wont be drawing any money out, but well worth noting the risks.

The company is an investment company of sorts (commercial property), we are looking around for an investment but at the moment, nothing we've found has worked for us, hence the need for reasonable access to the money, come the day that we find the right place.

thanks again...

[All that jazz]

Eric Mc said:

Be careful about where you put any surplus funds. If you put it into an account that it is NOT in the name of the company, you will be technically withdrawing money from the company for personal use - and you will therefore be triggering an Income Tax charge and perhaps an NI charge as well.

Is that not classed as a director's loan which so long as it's repaid before the end of the acconting year is not a problem?

[egomeister]

I have a savings account with Santander which earns me 0.5% or so. Not great but a lot better than you are doing at the moment!

[Oceanic]

Buy some physical commodities, gold sovereigns for instance?

[Eric Mc]

All that jazz said:

Eric Mc said:

Be careful about where you put any surplus funds. If you put it into an account that it is NOT in the name of the company, you will be technically withdrawing money from the company for personal use - and you will therefore be triggering an Income Tax charge and perhaps an NI charge as well.

Is that not classed as a director's loan which so long as it's repaid before the end of the acconting year is not a problem?

It could be classed as a Director's Loan. A director's Loan can be repaid up to 9 months AFTER the year end without incurring any penalty Corporation Tax charges.

However, if the loan amount is in excess of £10,000, then there will be PAYE Benefit in Kind implications unless the company is charging the director a commercial rate of interest on the money he has borrowed from the company.

[StangGT]

Oceanic said:

Buy some physical commodities, gold sovereigns for instance?

Blimey, I'm not that lucky... prices would tumble if I bought gold sovs.

[Ean218]

Aldermore pay 1.1% on their Easy Access Deposit A/C.

FSCS deposit protection does not apply to all businesses, check the rules.

[Zoon]

Ean218 said:

Aldermore pay 1.1% on their Easy Access Deposit A/C.

FSCS deposit protection does not apply to all businesses, check the rules.

I can second them, currently had an account with them for 3 years.