Business Savings Account

[Paracelsus]

I'm thinking of giving Wise a go, at 4.54%. The only thing I'm worried about is complicating my annual return as strictly speaking I suppose this would be investment income rather than just interest, as Wise kind of present it as.

Anyone using them? And if so are you just putting it down as interest in your CT600?

My accountant advised that putting more than 25% of company funds in Wise's MMFs would make my LTD an investment company, and thus lose the "small profits exemption" for CT (first 50k profit taxed at 19% vs 25%) so a tax hit, and also lose BADR on closing the company.

Bearing that in mind I canned the idea until such time that 25% of balance sheet is a big enough sum to make it worthwhile (if rates are still high)

[BigLadFromBeeston666]

Agree that the Wise offering is riskier than a regular savings account, at least for the time the money is held by Wise and not in an asset class, but it's hard to see how Shawbrook or any other instant access account compares on rates or fees. What are these other "fees"? I opened account a long time ago, so perhaps they are new. The "equivalent" instant access account with Wise is offering 4.82% on GBP and 4.99% on USD at present. Shawbrook is 3.2%. So, yes, not exactly comparable on risk but, to be clear, also not comparable on rates, so it depends how you weigh those two things.

https://wise.com/gb/pricing/business

seems like there's a 0.55% fee for holding the money? The 0.43% to send money is a little unclear if that applies to sending and receiving your own funds

I'd be interested to know what it reads on your account as I'm just going by the info on the website!

[jamesbrown]

https://wise.com/gb/pricing/business

seems like there's a 0.55% fee for holding the money? The 0.43% to send money is a little unclear if that applies to sending and receiving your own funds

I'd be interested to know what it reads on your account as I'm just going by the info on the website!

There's no fee for faster payments in GBP, that 0.43% is for FX. Bearing in mind you get the interbank rate before that fee, it's very competitive (it varies slightly between currencies, but 0.43% is for EUR). But, again, that is only relevant if you're doing FX.

There is also an asset fee of 0.29% for the MMF, of which 0.19% goes to Wise and 0.1% to the fund manager (Blackrock). Details here:

https://wise.com/gb/business/interest

[jamesbrown]

There's no fee for faster payments in GBP, that 0.43% is for FX. Bearing in mind you get the interbank rate before that fee, it's very competitive (it varies slightly between currencies, but 0.43% is for EUR). But, again, that is only relevant if you're doing FX.

There is also an asset fee of 0.29% for the MMF, of which 0.19% goes to Wise and 0.1% to the fund manager (Blackrock). Details here:

https://wise.com/gb/business/interest

Oh, and I think the 0.55% is for share investments, but I don't think you were talking about those, and they are certainly not comparable to an easy access savings account - far more risk. Wise has three account types AFAIK: ordinary (no interest); interest; and stocks.

[BigLadFromBeeston666]

Blimey, double liked! A lot clearer than the Wise website - I was struggling to understand all the fees, didn't realise the interest part had a separate page. I blame it on poor UX and definitely not my reading ability

Going to give Wise a punt whilst the rate is high

[alphadog]

FYI, HSBC business account holders can opt to put a portion of the warchest in HSBC business money market accounts. For £50k plus, current gross rates are as follows:

7 days, 14 days, 21 days - 0.4pc
1 month - 4.61pc
2 months - 4.76pc
3 months - 4.87pc
4 months - 5.06pc
5 months - 5.1pc
6 months - 5.22pc

Sure, it's still below inflation, but it's better than nothing in the current account. Just have to make sure you get the timings right with future outgoings as the funds cannot be accessed before the end of the stated term. Covered under FSCS up to the standard limit.

[jmo21]

FYI, HSBC business account holders can opt to put a portion of the warchest in HSBC business money market accounts. For £50k plus, current gross rates are as follows:

7 days, 14 days, 21 days - 0.4pc
1 month - 4.61pc
2 months - 4.76pc
3 months - 4.87pc
4 months - 5.06pc
5 months - 5.1pc
6 months - 5.22pc

Sure, it's still below inflation, but it's better than nothing in the current account. Just have to make sure you get the timings right with future outgoings as the funds cannot be accessed before the end of the stated term. Covered under FSCS up to the standard limit.

This page only mentions an indicative interest rate of 0.1% for their example. Do you need to apply to get the rates you mention or are they listed somewhere on their website? (that I cannot for the life of me find)

[DigitalUser]

I'm doing the Wise setup at the moment - aside from the lack of FSCS protection, I've accrued a decent amount of interest over the past 4 months so I'll continue to run with it. At the moment I'm earning 4.82% which is very decent.

[alphadog]

This page only mentions an indicative interest rate of 0.1% for their example. Do you need to apply to get the rates you mention or are they listed somewhere on their website? (that I cannot for the life of me find)

HSBC's business money market account rates are not listed on their website, as far as I am aware. You need to phone them using the number on the page that you have linked.

[BigLadFromBeeston666]

My accountant advised that putting more than 25% of company funds in Wise's MMFs would make my LTD an investment company, and thus lose the "small profits exemption" for CT (first 50k profit taxed at 19% vs 25%) so a tax hit, and also lose BADR on closing the company.

Bearing that in mind I canned the idea until such time that 25% of balance sheet is a big enough sum to make it worthwhile (if rates are still high)

Oh that's a bit unnerving. I gave my accountant a link to the Wise site. I asked if I needed to bear anything in mind when using this from a tax perspective. They said it was fine as long as I kept in mind any interest would be the company's not mine.

The thought of losing small profit exemption is worrying.