Invest my ltd company funds?

[trowelhead]

Hello all,

I've been considering best options with company sitting on excess profits in cash.

Can i invest this in a shares account, and if so what providers offer business accounts?

As at the moment its earning quite possibly negative returns.

I'd like to invest it quite conservatively, perhaps 50/50 stocks bonds perhaps some gold and real estate too.

Let's say approx half short term (money market/bonds??) (accessible within 6-12 months) and half can be invested for the long term

Company only requires a small float to operate, and i already draw a decent income from it and fill personal isa - don't want to draw too much more personally as it becomes very tax inefficient

Thoughts gratefully received!

[anonymous-user]

Personal opinion,

• Sell the company and pocket your Entrepreneur's Relief. [10% tax]

• OK, so you don't want to sell - have you stuffed your pension yet?

• Otherwise just pay it out as dividend, stop moaning about income tax and be grateful you've pocketed the cash before Comrade Corbyn takes over the reins...

[Jockman]

Is your pension allowance used up? Is your wife’s allowance used up too?

For no risk option we transfer to a Cambridge & Counties 30 day savings account at 1.3%.

No assets need replacing?

[dalenorth]

rockin said:

Personal opinion,

• Sell the company and pocket your Entrepreneur's Relief. [10% tax]

• OK, so you don't want to sell - have you stuffed your pension yet?

• Otherwise just pay it out as dividend, stop moaning about income tax and be grateful you've pocketed the cash before Comrade Corbyn takes over the reins...

If I recall, HMRC will charge you the full tax rate on cash left in the company on sale?

[trowelhead]

rockin said:

Personal opinion,

• Sell the company and pocket your Entrepreneur's Relief. [10% tax]

• OK, so you don't want to sell - have you stuffed your pension yet?

• Otherwise just pay it out as dividend, stop moaning about income tax and be grateful you've pocketed the cash before Comrade Corbyn takes over the reins...

Thanks, company is still trading, so assuming ER is a no go - or at least i'd rather "save" it for if i need to actually sell the business in the future...

Unless it can be claimed multiple times.

Or did you mean actually sell the company? Suppose that may be one way to go

As for pension, no but the limit is 40k isn't it? Plus due to my age (28) i am reluctant to lock away funds, and would rather use ISAs etc wherever possible to stay liquid. As you mention Corbyn etc - i'm a bit uneasy with the future of pensions re pension age extensions etc

And yes, i'm certainly no miser and pay plenty of tax on current drawings! I want to avoid what would likely be a 50/60% loss to tax if i draw when i'm already paying tax at higher brackets

Edited by trowelhead on Wednesday 14th March 08:41

[trowelhead]

Jockman said:

Is your pension allowance used up? Is your wife’s allowance used up too?

For no risk option we transfer to a Cambridge & Counties 30 day savings account at 1.3%.

No assets need replacing?

No it is not used up, sadly no wife either or she could be drawing a dividend, use her isa etc.

That looks good, i'll look into the C&C option! Is that in personal name or business?

[98elise]

Why not extract it as a directors loan and invest it yourself. You need to pay interest (3% IIRC).

I take a loan and stick it in my mortgage offset. Effectively my company is making 3% instead of the mortgage company

[Jockman]

trowelhead said:

Jockman said:

Is your pension allowance used up? Is your wife’s allowance used up too?

For no risk option we transfer to a Cambridge & Counties 30 day savings account at 1.3%.

No assets need replacing?

No it is not used up, sadly no wife either or she could be drawing a dividend, use her isa etc.

That looks good, i'll look into the C&C option! Is that in personal name or business?

Business name.

There is a website that lists business savings accounts that Julian posted up. On my pc at work and I don’t have access so hopefully Julian will see this.

[Jockman]

dalenorth said:

rockin said:

Personal opinion,

• Sell the company and pocket your Entrepreneur's Relief. [10% tax]

• OK, so you don't want to sell - have you stuffed your pension yet?

• Otherwise just pay it out as dividend, stop moaning about income tax and be grateful you've pocketed the cash before Comrade Corbyn takes over the reins...

If I recall, HMRC will charge you the full tax rate on cash left in the company on sale?

No, but you are right to raise the issue.

There is a calculation to be done. Eric or Alpinestars are your main guys here.

[trowelhead]

98elise said:

Why not extract it as a directors loan and invest it yourself. You need to pay interest (3% IIRC).

I take a loan and stick it in my mortgage offset. Effectively my company is making 3% instead of the mortgage company

That's a good idea, is that possible long term, i thought that triggered a 25% company tax charge (can't remember it's name) on overdrawn accounts.

If it's possible long term then i'll probably do this!

[trowelhead]

98elise said:

Why not extract it as a directors loan and invest it yourself. You need to pay interest (3% IIRC).

I take a loan and stick it in my mortgage offset. Effectively my company is making 3% instead of the mortgage company

Oh - and offset mortgage is a great idea. Never had one, are your funds guaranteed as liquid / withdrawable on short notice?

Looking to move to a new place in next couple of months, so will chat to sarnie about this as an option...

[anonymous-user]

dalenorth said:

If I recall, HMRC will charge you the full tax rate on cash left in the company on sale?

Not unless it's changed in the last few years.

[Jockman]

desolate said:

dalenorth said:

If I recall, HMRC will charge you the full tax rate on cash left in the company on sale?

Not unless it's changed in the last few years.

Indeed, but they are wary of surplus cash. A good DD adviser will advise.

[98elise]

trowelhead said:

98elise said:

Why not extract it as a directors loan and invest it yourself. You need to pay interest (3% IIRC).

I take a loan and stick it in my mortgage offset. Effectively my company is making 3% instead of the mortgage company

Oh - and offset mortgage is a great idea. Never had one, are your funds guaranteed as liquid / withdrawable on short notice?

Looking to move to a new place in next couple of months, so will chat to sarnie about this as an option...

Yes. I have an IO mortgage, and a separate savings account (Scottish Widows). My interest payment is calculated based on mortgage minus savings. There are no restrictions on me moving money in or out of the savings account.

I do have to pay the company money back at a set point or incur a tax change (9 months after the company year end IIRC) but my accountant tells me when this is coming up. At that point I simply move the cash back into my company account (and pay the outstanding interest).

The loan can be re-taken at a set period after that. I can't remember what the period is though.

[msport123]

I thought there was a limit on what you can take out via directors loan and payback within the 9 month window - interest free. Didn't think you could go overdrawn by anymore than 5-10k?

[vindaloo79]

Heres some notes from last year I started looking at on beneficial loans from Ltd Co. Haven't done it yet but would welcome any thoughts/feedback:

Link to HMRC about loans from your company

https://www.gov.uk/hmrc-internal-manuals/employmen...

extract below

There is no chargeable benefit in any year of assessment on a loan made to an employee if the loan:

• is for a fixed period that cannot be changed and
• is at a fixed rate of interest that cannot be changed during that period and
• when the loan was first made, the interest paid on it in the year it was made was not less than interest calculated at the appropriate official rate(s) for that year.

So.... looks like to me that if you give yourself a loan of £50k over 20 (any fixed period) years at 3% it is currently above the official rate for this year so no beneficial loan or NI impact. Seems a nice way to get access to extra money. just annoying you have to keep the company open for 20 (fixed period as above) years, i guess it would be dormant if only thing happening is repayments...

https://www.gov.uk/expenses-and-benefits-loans-pro...

extract below


You might not have to report anything to HMRC or pay tax and National Insurance on some types of beneficial loans.

This includes loans you provide:

• in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee)
• with a combined outstanding value to an employee of less than £10,000 throughout the whole tax year (£5,000 for 2013 to 2014)
• to an employee for a fixed and invariable period, and at a fixed and invariable rate that was equal to or higher than HMRC’s official interest rate when the loan was taken out -- are we an employee as well as a director?

Ok so the above only helps for less than £10k, i do this one regular anyway.

https://www.gov.uk/hmrc-internal-manuals/employmen...

No charge is made on beneficial loans obtained by reason of a person’s employment in the circumstances summarised in the following table. The relevant instructions should always be consulted.

* The loan is for a fixed period at a fixed rate of interest and the loan was first made

on or after 6 April 1978 at an interest rate equal to, or more than, the appropriate official rate(s) for the year the loan was made.

This looks good to me however the link from that page, states:

https://www.gov.uk/hmrc-internal-manuals/employmen...

All claims to this exemption must be dealt with by an Inspector (see EIM26152). Experience shows that few cases meet the tests set out below.

I generally feel less contact I have with tax inspectors the less hassle and time I am going to have with them. I don't have any clue if it is a formality getting these kind of things agreed

Edited by vindaloo79 on Wednesday 14th March 13:53

[sbk1972]

Good question / thread.

I pay large amounts of Corp tax and am looking at ways of reducing this.

I opened up a SIP account and was under the belief I can `throw` money into that. Not sure how I represent this on my accounts balance sheet, i.e. do I just have an entry that states "Lands down / SIP - £5,000" ?

I'm always interested in way to invest into my future whilst saving taxes.

Im thinking of also taking out a loan to buy a car. Instead should I now consider a directors loan with a 5 year repayment duration / 3% interest ?
SBK

[vindaloo79]

sbk1972 said:

Good question / thread.

I'm always interested in way to invest into my future whilst saving taxes.

Im thinking of also taking out a loan to buy a car. Instead should I now consider a directors loan with a 5 year repayment duration / 3% interest ?
SBK

I just edited my last post which will reveal a bit more when the links are followed regarding these fixed interest loans. As always run past your accountant. I'm with one of the big accountancy firms who seem to get perplexed whenever I try talk about anything outside the cookie cutter templates they like to use with their clients for an easy life.

[Jockman]

sbk1972 said:

Good question / thread.

I pay large amounts of Corp tax and am looking at ways of reducing this.

I opened up a SIP account and was under the belief I can `throw` money into that. Not sure how I represent this on my accounts balance sheet, i.e. do I just have an entry that states "Lands down / SIP - £5,000" ?

I'm always interested in way to invest into my future whilst saving taxes.

Im thinking of also taking out a loan to buy a car. Instead should I now consider a directors loan with a 5 year repayment duration / 3% interest ?
SBK

It should simply show up as investments in the Assets on your balance sheet. Lots of companies do it.

[anonymous-user]

Pension contributions will reduce your Corp tax bill.