Threshold before becoming an investment company

[Jog On]

I’ve read that if you invest through your company to a certain level you become an ‘investment company’ and subject to large company corp tax regardless of turnover.

Can anyone clarify the exact point at which your company will become regarded as an investment company?

[Nixon Williams]

Generally this would apply to a company with no trading and the source of its income being from investments such as interest and dividends.

The small rate of Corporation Tax would not apply.

Alan

[Jog On]

Thanks for that.

So lets say that I put aside 20% of company profit to invest in assets that generate more income my company is still taxed at the small comany rate as the vast majority of income comes from trading (as a contractor)?

[ASB]

Thanks for that.

So lets say that I put aside 20% of company profit to invest in assets that generate more income my company is still taxed at the small comany rate as the vast majority of income comes from trading (as a contractor)?

As is typical in UK tax law there is no exact answer. Ask your accountant for thier opinion and then consider it. you can also ask the tax office for an opinion - but they are not strictly binding.