Inflation and retained profit

[youngguy]

Hi all,

We know inflation is on the way to 11%, with the prediction being it will take 2 years to get back down to around 2%.

Interest rates will clearly not match anything like that, so I'm wondering if anyone is planning to do anything with retained profit (what can you do?) to combat some of that. 10% inflation on 100k plus is a hefty chunk afterall.

The only thing I can think of (currently inside IR35) is to MVL, although that means a 10% tax hit (irony) and then looking at investments/stocks to beat the rate or a BTL.

Alternatively, shrug it off and do nothing!

[northernladuk]

If you MVL you can't open another company for 2 years. You need to be basing MVL on future business, not on a quick interest grab. Many people are regretting MVL now because their inside gigs ended and they've been offered an outside one they can't go LTD with.

Don't knee jerk just because of inflation. If you were going ot invest the company you money you should do it whatever the economy, not make rash decisions to make a few quid. You mentioned the stock market. Have you seen it recently? Inflation has rocketed because there is a recession looming. What do you think that does to stocks?
Have you see the house price growth recently? You sure you aren't buying in to a boom and it's gonna drop soon?

You need to do much better research rather than just grabbing ideas out of your head because of a short term (hopefully) economy issue.

If you can't be bothered to do a ton of good research first then I'd say get the highest interest savings account you can and leave it there. Aldermore used to be the go to place but you'll need to make a decision on lock in durations.

[Lance]

at the end of the day inflation is just the falling value of the GBP.
To combat it you need it elsewhere than GBP. But that comes with risks.

EG. buy Swiss Francs. That is low inflation. But may change. Or the CHF might tank for other reasons.
At least with inflation you know where you stand.
And in reality, it's only certain items that measure inflation. If you don't consume those items then it's not a concern.

[Guy Incognito]

+1 to that. If most of your income is spent on Housing you should not care about inflation.

[NotAllThere]

+1 to that. If most of your income is spent on Housing you should not care about inflation.

Unless a government introduces a wealth tax on assets.

[Guy Incognito]

Unless a government introduces a wealth tax on assets.

Such an innovation would see riots...

[NotAllThere]

Such an innovation would see riots...

Not if it starts at houses worth £2 million. Initially. Mind you, assets of around £2 million where I live will attract a yearly tax of about £400. Not worth getting the molotovs out (and who can afford the fuel anyway?).