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How to make the most of unclaimed dividends?

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    How to make the most of unclaimed dividends?

    I thought I'd ask this question to see what the general approach was to making the most of cash left in your own businesses (of you're operating as a LTD company).

    I pay myself a salary and then take dividends from time to time. However I only take the amount of dividends to remain under the higher dividend tax threshold. This obviously means there is cash still left in the business, however if I took this I would be liable for a higher rate of tax.

    What I wanted to know is how I can make the most of this money without taking it as a dividend? I can put so much into a pension, but what approaches do people have to make their money work for them?

    Any thoughts and opinions would be welcomed.

    Thanks

    #2
    Originally posted by RTB View Post
    I thought I'd ask this question to see what the general approach was to making the most of cash left in your own businesses (of you're operating as a LTD company).

    I pay myself a salary and then take dividends from time to time. However I only take the amount of dividends to remain under the higher dividend tax threshold. This obviously means there is cash still left in the business, however if I took this I would be liable for a higher rate of tax.

    What I wanted to know is how I can make the most of this money without taking it as a dividend? I can put so much into a pension, but what approaches do people have to make their money work for them?

    Any thoughts and opinions would be welcomed.

    Thanks
    It will be interesting to see what people say. We have had plenty of questions about investing company cash in individual areas but never a question asked like this. Areas searchable off the top of my head were Premium Bonds, stocks, bonds, morgages and large loans but all seemed to fail due to having paying tax on any profits plus the downsides of taking out cash above and beyond the 5K directors loan.

    I would guess from all these responses that there is nothing really worth doing with it but as I say it has never been asked in this way before.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Originally posted by RTB View Post
      I thought I'd ask this question to see what the general approach was to making the most of cash left in your own businesses (of you're operating as a LTD company).

      I pay myself a salary and then take dividends from time to time. However I only take the amount of dividends to remain under the higher dividend tax threshold. This obviously means there is cash still left in the business, however if I took this I would be liable for a higher rate of tax.

      What I wanted to know is how I can make the most of this money without taking it as a dividend? I can put so much into a pension, but what approaches do people have to make their money work for them?

      Any thoughts and opinions would be welcomed.

      Thanks
      As you've mentioned already, contributing to a pension is a good option.

      Another worth considering is using the money for a company owned investment such as a rental property which could generate additional income for the business.

      Comment


        #4
        I've read post from people who've bought rental properties beofre and they've not recommended it. There is no capital gains allowance for your Ltd, so you have pay CGT.

        I keep my investments outside the Ltd and I keep the cash in the Ltd in the hightest paying savings accounts I can find (limit to 50K in each). I use the Ltd funds as my cash (safe) side of my investments.

        Comment


          #5
          Originally posted by RTB View Post
          I thought I'd ask this question to see what the general approach was to making the most of cash left in your own businesses (of you're operating as a LTD company).

          I pay myself a salary and then take dividends from time to time. However I only take the amount of dividends to remain under the higher dividend tax threshold. This obviously means there is cash still left in the business, however if I took this I would be liable for a higher rate of tax.

          What I wanted to know is how I can make the most of this money without taking it as a dividend? I can put so much into a pension, but what approaches do people have to make their money work for them?

          Any thoughts and opinions would be welcomed.

          Thanks
          If you're married, have you explored gifting shares to your spouse so they can receive a dividend up to the higher rate threshold? What about getting the company to pay for your life insurance?

          Comment


            #6
            Buying rentals though Ltd Co.

            Yeah - you have to pay CT on rental profits and profits derived from the sale of the house, but you do have to pay CGT upon the sale if personally owned and income tax on personal income.

            Another way of looking at it is, that at the time you wish to purchase a rental and you are already over the 40% tax bracket, buying it through the Ltd Co means you don't then subject yourself to 40% tax when finding the deposit.

            Indeed, this is what I have recently done. A small one bed that required 35% deposit came to roughly £42k. I would have had to have found a further £30k the following year in SA taxes for the pleasure of that one.

            If you think, no matter which way you slice it, tax will have to paid somewhere down the line, it may just come down to lots of tax deferral that makes your mind up.

            Comment


              #7
              Originally posted by RTB View Post
              What I wanted to know is how I can make the most of this money without taking it as a dividend? I can put so much into a pension, but what approaches do people have to make their money work for them?
              1. Keep the retained earnings / warchest at a level which will cover minimum 6 months of benchtime.

              2. SIPP contributions.

              After that, I'm currently looking at the idea of putting surplus company money into preference shares
              - these can yield at 6-7%+ and (I think) this income stream is free of corp tax. And more liquid and less
              complicated than BTLs.

              Comment


                #8
                Originally posted by Hex View Post
                I've read post from people who've bought rental properties beofre and they've not recommended it. There is no capital gains allowance for your Ltd, so you have pay CGT.

                I keep my investments outside the Ltd and I keep the cash in the Ltd in the hightest paying savings accounts I can find (limit to 50K in each). I use the Ltd funds as my cash (safe) side of my investments.
                Our ltd co is similar. We just switched from our ltd co 7-day scottish widows deposit to 120day Secure Trust business deposit account @ 3.21% ! That is better than most bonds

                Comment


                  #9
                  If you don't mind being a bit fast and loose (I am not sure of the benefit in kind implications of this so ask your accountant), I believe some offset mortgages are available which will allow you to offset company funds against your personal mortgage.
                  ‎"See, you think I give a tulip. Wrong. In fact, while you talk, I'm thinking; How can I give less of a tulip? That's why I look interested."

                  Comment


                    #10
                    Open company bank accounts in different currencies and play the Forex market.

                    Comment

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