Ltd Company Investment Funds

[northernladuk]

Give Chris Maslin a ring. He's an accountant that posts on here but also has a hand in MVL Online so will know about the accounting and liquidation sides. He should have some pearls of wisdom for you.

[ChimpMaster]

You could set up a separate company for investments and then loan the funds from your IT Ltd. Obviously read up on the rules and regs before you do this.

A slight alternative is that you could set up a holding company which owns your IT company and the Investment company.

I could write essays about the benefits and impacts of each but I really don't have time. I'm sure you'll read up and speak to the right experts to learn more.

[Zylon]

I'm also interested in understanding this area better, and personally it's not the type of question I'd expect an accountant to advise on, nor which I think should need expensive professional advice as a start-point - so perfectly legit question for a forum IMO.

That said, the very first Google result for "investing as a limited company" contains a concrete answer and example for your question #1, so I suspect you might find other answers easily too.

[northernladuk]

[QUOTE=Zylon;2490908]I'm also interested in understanding this area better, and personally it's not the type of question I'd expect an accountant to advise on, nor which I think should need expensive professional advice as a start-point - so perfectly legit question for a forum IMO.

That said, the very first Google result for "investing as a limited company" contains a concrete answer and example for your question #1, so I suspect you might find other answers easily too.

But the guy that wrote that is a contractor accountant?

I'd also check the date of the article as ER rules have changed recently.

[Zylon]

But the guy that wrote that is a contractor accountant?

I'd also check the date of the article as ER rules have changed recently.

Fair point, I meant it's not question I'd expect a typical contractor accountant to know in depth.

[Fred Bloggs]

OP, if you aren't already, I'd be putting GBP 40k into a SIPP each year, while you still can. It is very cost effective. Also, depending on your circumstances**, you may be able to carry forward a GBP 40k allowance from the previous three years too. I wouldn't be tempted to accrue large investments inside the MyCo if I were you at least until you have maxxed out SIPPs and ISAs. HTH.

** If you have a pension scheme in place but have made no contributions to it the previous three years.

[chavvy]

[QUOTE=Zylon;2490908]I'm also interested in understanding this area better, and personally it's not the type of question I'd expect an accountant to advise on, nor which I think should need expensive professional advice as a start-point - so perfectly legit question for a forum IMO.

That said, the very first Google result for "investing as a limited company" contains a concrete answer and example for your question #1, so I suspect you might find other answers easily too.

Yes, I linked to that earlier in the thread, problem is it is 5 years out of date. I would like to know if this position is still in anyway accurate.

[chavvy]

OP, if you aren't already, I'd be putting GBP 40k into a SIPP each year, while you still can. It is very cost effective. Also, depending on your circumstances**, you may be able to carry forward a GBP 40k allowance from the previous three years too. I wouldn't be tempted to accrue large investments inside the MyCo if I were you at least until you have maxxed out SIPPs and ISAs. HTH.

** If you have a pension scheme in place but have made no contributions to it the previous three years.

Thanks,

I am in the process of setting up a SIPP. I don't want to put everything into a SIPP as I might/will want access to it. I was thinking perhaps a 50/50 between a SIPP (tax avoidance) and Ltd Co. trading account (good return on balance) - or some ratio, whatever is best.

[Fred Bloggs]

Thanks,

I am in the process of setting up a SIPP. I don't want to put everything into a SIPP as I might/will want access to it. I was thinking perhaps a 50/50 between a SIPP (tax avoidance) and Ltd Co. trading account (good return on balance) - or some ratio, whatever is best.

Fine, it depends on age. The closer you are to 55 the more compelling a SIPP investment gets. So, it isn't for everyone.

[Maslins]

The 20% tests when it comes to trading vs investment are still what's relevant to the best of my knowledge.

There will always be varying opinions, but I think it's generally agreed that having investments inside your contracting company is a bad idea. Therefore your main options are:
- have a separate company for the investments,
- accept the personal tax hit taking more money out now, and invest personally.

People seem to hate paying personal tax so often seem keen going for the former. My issue is generally speaking all that's typically doing is deferring personal tax. Ie your investments will be inside a Ltd Co, and at some point you'll want to spend that money on personal things, hence you'll need to suffer personal tax. Yes you may go down the route of "I'm earning very well now, so will withdraw later when I'm (semi) retired so my earnings are lower, and hence tax will be lower". That's fine to a point, but I feel really that's what your SIPP is for. Also you'd be committing to two loads of accounting fees indefinitely, and be at risk of future changes to tax rules on investment companies.

Therefore my personal view would be basically what Fred Bloggs said. Don't bother investing company money, go big in your SIPP, any excess take out and invest personally. If you're looking to continue to contract for maybe 10 years, I'd forget about an MVL as a possible option, the chances of it still being viable then are slim, so daft to plan based on that now IMHO.