what to do with business account money?

**mailric** · 6 December 2007, 23:36

fook it . spend it.

**shelby68** · 6 December 2007, 23:44

Originally posted by mailric View Post

fook it . spend it.

I agree buy squirrels, lots of them, they're tax deductable!

**Gonzo** · 6 December 2007, 23:54

Originally posted by hgllgh View Post

I have around 150K sitting in a cater allen reserve business account which actually earns a good rate of 4.8% gross so 3.84% after corp tax. With RPI interest over 4% this means the money isn't even keeping its head above water

what is the best thing to do with this amount of money?
ofcourse, withdrawing over 38K will mean an extra 22% tax in the dividends (currently take 10K as salary) so effectively it's not worth withdrawing over the upper limit ??

1. Ask your accountant first.

2. Close your company and take the money out as a capital gain before April when the rules about doing that will change.

3. Thats just an idea but run it past your accountant.

**weemster** · 7 December 2007, 09:01

I 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

**Bear** · 7 December 2007, 09:42

I don't see the point of keeping it in the business account. Keep enough in there to cover a year off work (if you normally don't go above the 38k limit then 40k will be plenty).

Yes you will pay tax on it but at least you get to enjoy the money. Leaving it in the business account forever is a bit pointless - the interest will add to it and you'll always be faced with the same question. Why take it out 'cos then I'll have to pay tax on it.

Whatever route you take - one day you will have to take it out and pay the tax - at retirement maybe?

Take it out now and get better rates of return on the money now

**Cooperinliverp00l** · 7 December 2007, 10:14

buy a BTL ?

**Alan @ BroomeAffinity** · 7 December 2007, 12:36

Agree with Gonzo. I'm an accountant and advising any client with a decent amount in the reserves that has been trading for longer than 2 years to shut the company and go down the CGT route.

Ask your own accountant first though. And yo need to do it before April as the rules change.

Once you have taken it out, then buy a BTL.

**Crossroads** · 7 December 2007, 13:10

I'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.

**IR35 Avoider** · 8 December 2007, 12:16

Use 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.

what to do with business account money?