best way to squirrel money away

**Burdock** · 2 July 2007, 13:21

I am a financial cretin, but having read similar posts on this forum I bet you £10,000 that the consensus will be....pay your mortgage off.

**TheFaQQer** · 2 July 2007, 13:27

Originally posted by Burdock

I am a financial cretin, but having read similar posts on this forum I bet you £10,000 that the consensus will be....pay your mortgage off.

Pay your mortgage off.

But you can't just do that with company money - you need to take the money out of the business first.

**Bluebird** · 2 July 2007, 13:28

Originally posted by TheFaqqer

Pay your mortgage off.

But you can't just do that with company money - you need to take the money out of the business first.

let your co buy the house off you, then pay the mort off ?
but I guess there's a whole stack of legislation that says you can't do this...

**DaveB** · 2 July 2007, 13:41

Originally posted by TheFaqqer

Pay your mortgage off.

But you can't just do that with company money - you need to take the money out of the business first.

If you have the money to hand then yes, pay off your mortgage. If you are keeping yourself below the upper rate tax threshold this might not be possible. It's worth doing the sums to see if you save more through taper relief on co. funds than you do in interest payments on the mortgage.

I suspect the taper relief method might actually work out better and you can then sink a lump sum into the mortgage when you wind up the co. but I'm not an accountant so make sure you double check that!

Otherwise look into a personal pension scheme or some of the short term high interest accounts around now. I saw one recently paying 12% over 12 months on limited deposits. I think it was Alliance and Leicester but can't remember.

**TheFaQQer** · 2 July 2007, 13:52

Originally posted by Bluebird

let your co buy the house off you, then pay the mort off ?
but I guess there's a whole stack of legislation that says you can't do this...

Nothing that stops you doing this.

BUT, the company will pay capital gains tax on the increase in value of the property, whereas you don't pay any gains on your primary residence when you come to sell it.

**TheFaQQer** · 2 July 2007, 13:53

Originally posted by DaveB

If you have the money to hand then yes, pay off your mortgage. If you are keeping yourself below the upper rate tax threshold this might not be possible. It's worth doing the sums to see if you save more through taper relief on co. funds than you do in interest payments on the mortgage.

I suspect the taper relief method might actually work out better and you can then sink a lump sum into the mortgage when you wind up the co. but I'm not an accountant so make sure you double check that!

There is no guarantee that you will get taper relief, remember! You may end up not being able to take it that way.

**DaveB** · 2 July 2007, 14:01

Originally posted by TheFaqqer

There is no guarantee that you will get taper relief, remember! You may end up not being able to take it that way.

No there isn't but, as has been discussed to the point of oblivion elsewhere, you can only plan based on the curent situation and those future developments that you know will take place.

Taper relief may be removed, it may not. But by not planning to take advantage of it now you may well miss out later and in fact you would lose more by not planning for it rather than by doing so and then having it removed.

Take all funds from the co. now and you will pay tax on it and only gain what interest you can get on the funds after tax has been paid.

Leave the money in the Co. and you pay no tax on it , gain interest on it while it is invested by the co. and still have the potential to gain taper relief on it when the co. is wound up. Stupid not to really.

Worst case scenario: Taper relief is disallowed, you end up taking the cash from the co. and paying tax on it as you would have done to start with.

**DaveB** · 2 July 2007, 14:03

Originally posted by TheFaqqer

Nothing that stops you doing this.

BUT, the company will pay capital gains tax on the increase in value of the property, whereas you don't pay any gains on your primary residence when you come to sell it.

Not to mention the fact that you still need somewhere to live and unless you pay the Co. a market rate as rental you will end up being taxed on BIK for living in subsidised Co. accomodation.

best way to squirrel money away