Temporarily moving LTD company cash into high interest personal account

[anon490292]

I'm wondering if it's possible to move money from my LTD company account (where is not earning interest) into a personal account for 9-12 months to accumulate some interest (at least 4%), then move it back. This would be outside of my normal dividend payments.

My accountant says that so long as the money is present at the start and end of the business tax year, it will be as if it never left... is this correct?

[wattaj]

...My accountant says that so long as the money is present at the start and end of the business tax year, it will be as if it never left... is this correct?

Almost: you would be taking a rather large Directors Loan with the expectation that this loan is repaid before the end of your company's tax year. There will be a BIK on any outstanding balance as of the YE. Any amount outstanding as of YE+9mths will also be subject to a S455 charge of 32.5%.

Best avoided IMHO... unless you know what you're doing. And you clearly do not.

[northernladuk]

No it's not. It's not your money it is the businesses, you cannot just give yourself it, earn free interest and then give it back to the company. You really need to understand this distinction. Is there a process of passing it properly from the business to yourself personally? Yes, but just moving it for a bit of free interest is not one of them.

Is your accountant correct? You might get away with it and he's playing extremely lose and fast but is it correct? No.

It is possible following certain processes i.e. a loan but that comes with a whole host of issues and tax so you need to understand that. If it were possible we'd be all doing it for a start and the fact non of us are speaks volumes.

I'd spend a bit more time understanding the difference between the company money and your money and learn a bit more about your business accounts before just chucking hair brained schemes in the pot. They've all been thought of before and if it isn't in a contractor guide somewhere then you can't do it.

Oh, and get a new accountant.

[Lance]

I'm wondering if it's possible to move money from my LTD company account (where is not earning interest) into a personal account for 9-12 months to accumulate some interest (at least 4%), then move it back. This would be outside of my normal dividend payments.

My accountant says that so long as the money is present at the start and end of the business tax year, it will be as if it never left... is this correct?

your accountant is suggesting that you commit fraud IMO

A director loan is the correct way to do this. And the date it needs to be paid back is 9 months after company year end. And you should pay interest on the loan otherwise it will go on your P11d as a benefit.

So yes you can do it (I have several hundred k offsetting my mortgage), but not the way suggested.

The reason I say fraud is I infer that the suggestion is that the money is never seen to be out of the company, which is not actually true, and if you were inspected it wouldn't take much to see the bank transactions.

[northernladuk]

A tiny bit of thought and effort and you might have found business savings accounts that do pay interest. Aldermore used to be the best one around. I've saved you the time and effort googling them.

https://www.aldermore.co.uk/business...ings-accounts/

You do know that any interest the company makes will be taxed and you did factor in that in your fudge the money you would earn would also be taxed?

[jamesbrown]

Search Deed of Trust. However, the short answer is that you’d be very brave. Perhaps more importantly, no high-street bank will allow it.

[northernladuk]

Search Deed of Trust. However, the short answer is that you’d be very brave. Perhaps more importantly, no high-street bank will allow it.

A lot of effort for sub 3% for 11 months which is then taxed. He cant' take advantage of regular savers or fixed deals so it's bog standard rates for less than a year.

20k at 3% for 1 year = £608 of which he'll get taxed to the tune of around £120 (unless it goes in an ISA of course). Probably completely wrong but it gives the OP an idea of what he's going to make out of his harebrained scheme.

We are assuming this is spare money and not tax money that he'll have to shift back in and pay at whatever point of his companies tax year and so on.

[jamesbrown]

It's moot anyway. Every personal savings account that I have ever seen explicitly disallows holding money for a company in the T&Cs, so you'd be breaching those.

[northernladuk]

Indeed so the answer is no and the advice to get a new accountant stands.

[BlasterBates]

https://community.hmrc.gov.uk/custom...4-00155d9771aa

f you set up as a sole trader (‘self-employed’) you can use your personal bank account. On the other hand, a limited company must have a separate business account, as it is a distinct legal entity. There is a legal requirement to keep your personal and business finances separate.