Would you withdraw money to place in an ISA when in the higher tax bracket?

[IR35 Avoider]

When I was in that situation, I left the money in the company for up to nine years before I managed to withdraw it all in years when I could so without paying higher rate tax.

While in the company it was invested.

However most of those nine years were before we were allowed to put so much in pensions, and the money was earned before IR35 came in, so had zero risk of the taxman confiscating some of it after an investigation. Now I would put as much as possible in a pension rather than retain in the company.

[ASB]

You dont have to "make up" 32.5%. You have to make up the difference between what you can withdraw it at over time and the cost of doing it now.this is not easy and at best guesswork depending upon your circumstances.

depending upon age and what happens career wise in the future this could very easily be nil. E.g. you become a higher rate taxpayer for somebody else.

it may be appropriate to consider making corporate contributions to your pension instead.

this will produce some limited tax savings (75% of it is eventually taxed) but the saving can be substantial if a higher rate payer whilst contributing and normal rate in retirement.

[lukemg]

Agreed - I don't think it's worth withdrawing funds at that rate to put in an ISA, you will never catch the initial tax up.
Personally I am choosing to invest rather than paying off my mortgage early but I wouldn't recommend this to everyone.
I would suggest direct company payment into a SIPP, regardless of your current age.

[sop]

Thanks for all the replies guys.

Looks like the general consensus is keep it in the company but max out pension contributions.

When I was in that situation, I left the money in the company for up to nine years before I managed to withdraw it all in years when I could so without paying higher rate tax.

While in the company it was invested.

However most of those nine years were before we were allowed to put so much in pensions, and the money was earned before IR35 came in, so had zero risk of the taxman confiscating some of it after an investigation. Now I would put as much as possible in a pension rather than retain in the company.

Did you use entrepreneur's relief to withdraw the money? I would have thought investing the money from your company would have disallowed you from ER?

Cheers

[Hobosapien]

Looks like the general consensus is keep it in the company but max out pension contributions.

I'm going to split my approach so not max out the pension contribs but also continue to take some cash out of company as divis to put in s&s ISA for more short/medium term flexibility.

I've already got some cash ISAs that I may as well transfer directly to s&s ISA (no impact on current year contribution limits) due to the poor return with their crappy interest rates. I know the risk profile is different but that's what investing is all about.