Leaving cash in ltd business long term

[ladymuck]

Thanks for the reply. I was thinking of dropping the accountant and insurance policies straight away, as there will likely be no turnover while I'm a permie and I've timed the switchover to end neatly with this tax year. If I did lose the permie role I'd get them back again pronto of course. I'll look into the other costs as you suggest. Ta.

I'd keep the professional indemnity insurance for a year after your last contract ends, just in case. If you have any niggling doubts over the IR35 status of any of your contracts, you may want to keep investigation cover in place as queries can come in 6 years later and HMRC can go back further if they smell a rat.

[ladymuck]

Thanks for the reply. So what's the savvy way to do it?

No right or wrong answer there. How much can you do yourself / how much does your accountant do for you? With very few transactions going through the company you may want to negotiate a lower fee for you doing more of the work if you're not confident in doing it all yourself.

If you're going to keep drawing funds out as dividend, you'll need to make sure you have retained profit to keep them legal. If the company is making a loss due to no revenue but ongoing costs (see insurance above, etc) then you'll want to claim a CT rebate.

[spoovy]

I'd keep the professional indemnity insurance for a year after your last contract ends, just in case. If you have any niggling doubts over the IR35 status of any of your contracts, you may want to keep investigation cover in place as queries can come in 6 years later and HMRC can go back further if they smell a rat.

Thanks, I was thinking of keeping the IR35 insurance, but I hadn't considered PI. I will keep that too.

[Lance]

Thanks, I was thinking of keeping the IR35 insurance, but I hadn't considered PI. I will keep that too.

with those fees, and any accountancy needed you're getting into a 4 figure sum annually. This is at least 2% (and growing as the value decreases). This is a very high fee to pay if you compare against a management fee for an investment. And this isn't going to grow.
And inflation hasn't been considered.
You say long term? But long term for this is madness. Maybe 2/3 years at the most.

Perhaps it's best just to take the money and stick it into a savings fund/offset/gold.

[spoovy]

with those fees, and any accountancy needed you're getting into a 4 figure sum annually. This is at least 2% (and growing as the value decreases). This is a very high fee to pay if you compare against a management fee for an investment. And this isn't going to grow.
And inflation hasn't been considered.
You say long term? But long term for this is madness. Maybe 2/3 years at the most.

Perhaps it's best just to take the money and stick it into a savings fund/offset/gold.

Well I'd be paying 5k up front if I close the business in ER. So I either (Very rough figures obviously and yep not factoring inflation):
* Take it out, pay 5k upfront. 45k remains. At 2% pa from offset/investment whatever: after 3 years approx 47,500k.
* Leave it in. 50k - ~1k pa in costs over 3 years = 47k.

So definitely not worth it if timeframe over 3 years. Less than 3 years it might be, but there's not much in it.
Meh, I think I'll just close up shop.

[northernladuk]

Thanks for the reply. I was thinking of dropping the accountant and insurance policies straight away, as there will likely be no turnover while I'm a permie and I've timed the switchover to end neatly with this tax year. If I did lose the permie role I'd get them back again pronto of course. I'll look into the other costs as you suggest. Ta.

You will still need to keep the policies going for a reasonable time period incase anything pops up and you are gonna need your accountant at some point in the future so I'd discuss a holding rate or something with them rather than just drop them.

So definitely not worth it if timeframe over 3 years. Less than 3 years it might be, but there's not much in it.
Meh, I think I'll just close up shop.

IMO that's probably the best but gen yourself up with your saving/investing options. Offset mortgages have been around for decades.

[Lance]

Well I'd be paying 5k up front if I close the business in ER. So I either (Very rough figures obviously and yep not factoring inflation):
* Take it out, pay 5k upfront. 45k remains. At 2% pa from offset/investment whatever: after 3 years approx 47,500k.
* Leave it in. 50k - ~1k pa in costs over 3 years = 47k.

So definitely not worth it if timeframe over 3 years. Less than 3 years it might be, but there's not much in it.
Meh, I think I'll just close up shop.

do you sums.....

£50k in co

allowed £12k before CGT kicks in.
10% of the remainder is £3800 in CGT. But you still need to pay for the insolvency.

Stop doing back of a fag packet numbers. You cannot make a proper comparison like this.