Originally posted by Gonzo
View Post
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
what to do with business account money?
Collapse
X
-
-
Originally posted by weemster View PostI had the same question a couple of years ago. My accountant (as most) are reluctant to advise taking the money out of the company (for the reasons you have stated) - My argument was if you could get a solid investment say around around the 8 - 9% it would be possible (just based on compound interest alone) to recupe the initial tax hit of removing the money from the company. The other thing is say sod it and buy a nice holiday let abroad and use it yourself in the quiet months and stuff thinking to much about the most tax effecient ways of getting at the cash - after all you earned it
If I did this would this be a straight investment out of business capital in my
business account? i.e. would there be any tax to pay on the investment?Comment
-
Originally posted by Crossroads View PostI'd look to take the money out (as I am currently doing, with a similar sum). I'll be going down the closing the company route, but if I don't get granted ESC C16 I'll take the lot as dividends.
Some accountants (mine included) are very quick to recommend I invest the money in xyz. Oddly enough some accountants (mine included) are then very quick to recommend you speak to their in house IFA.
Cynical? Moi?
Take the money out, then it's yours rather than YourCo's.
Obviously this depends on lots of factors - do you need the money (e.g. pay off mortgage), are you close to retirement (put it in a pension) etc.
if i take it as divs then would the following be right...
10K salary + 29K divs at 20% = 7.8K tax
150K - 39K above = 111K divs at 40% = 44.4K
total tax paid 52.2KComment
-
Originally posted by IR35 Avoider View PostUse the money to pay dividends to take you up to the higher rate threshold in any year in which you wouldn't otherwise reach the threshold. In the meantime, invest the money. (I see Selftrade stockbrokers now offer a company share account.) This way you will pay no more tax on the money than you alread have.
If you have to pay any CGT at all on taking it out now, that is extra tax you could have avoided. If CGT is only 10% (because of taper relief) then that might be a price worth paying to get the money in your own hands now, any more than that and I would leave it within the company and treat is as part of my long-term savings.Comment
-
Take advantage of the credit crisis and high LIBOR rates.
For the amount of money you have in the bank you can get a rate of 6.74% if you put it in 1 month LIBOR
http://www.singers.co.uk/treasury/co...erestrates.htmComment
-
Originally posted by hgllgh View Postthanks for the reply, but why would i want to go up to the higher rate threshold? Also, what sort of investments do you recommend?
Investments are a big topic, and my opinion of what's worthwhile will change from month to month.
One simple strategy would be to divide your money equally between a bond fund (e.g. ETF with ticker=SLXX) and a tracker fund (e.g. ETF with ticker=ISF) and then whenever you add money or reinvest interest/dividends or remove money, choose to buy/sell so as to equalise your holdings in each. That way you will tend to buy more of whichever is down, or sell whichever has increased the most. The bond ETF is the only cheap way of getting into bonds, which is why I prefer it to normal funds. Selftrade currently charge zero commission on ETFs, which minimises the costs of reinvesting dividends. I don't know if they are going to keep this feature - they no longer mention it on their web site - however they may be replacing it with something even better - I think they may be going to allow free reinvestment of dividends generally.Last edited by IR35 Avoider; 12 December 2007, 13:34.Comment
-
Originally posted by hgllgh View Postthanks for the advice.
if i take it as divs then would the following be right...
10K salary + 29K divs at 20% = 7.8K tax
150K - 39K above = 111K divs at 40% = 44.4K
total tax paid 52.2KComment
-
whats with all this long term planning.
people drop dead everyday. you cant take your money to heaven.
live life or else who ever inherits it will lives it for you!
wish i had that much and i certainly know what will be doling with it.
please keep the thread going re investment opportunities. maybe I'll get there one day
css_jay99Comment
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Comment