Too much money in the bank...

[BrilloPad]

No, but you will

Will I say "get divorced"? I have not for at least 24 hours - maybe the leopard has changed its spots...

[ASB]

thanks guys, a few points:-

VCT- is that something to do with venture capitalists. I've never considered all of that, sounds interesting.

pension- I feel I do give a lot into pension already (16% of contract income). Does anyone put more?

charity- I do give regularly to numerous charities, is it best to do this from company account then instead of personal so that I can reduce cash in the company rather than from my personal bank account?

bn66 and esc16, no idea what they are but I'll try and search the forum to find out more but a quick summary from someone would be useful

I don't mind the cash sitting in company account but it's only going to start reducing if I get out of contract. I just think the interest on it is poor and barely covers inflation, seems a waste to just keep it there. Would prefer to put it into funds or property.

thanks

Pension: depends on your age but it can be a good strategy if you have used all your basic rate allowances and is probably about the only effective way if you are IR35 caught.

BN66 will render obsolete all the DTA explotation (at least for a while) - but does depend on whether any scheme defences are sucessful.

ESC16 allows you to take accumulated funds as a capital gain which can lead yo lower tax bills (substantially) if you have used all basic rate allowance. It's only on cessation of trade really though and has been tightened up on with differing rules and recent changes to the capital taxes system.

Investing in shares and or property can be useful if you have used all basic rate allowances, but again you need to run some numbers carefully to monitor the differening potential returns based on whether you take a tax hit now or later. Also property owned by you limited can give interesting issues later. If you amass a huge amount there is also a risk of getting classified as an investment company and losing the smaller companies CT regime.

Specialist advice based on your objectives and circumstances is generally wise.

[Fishface]

20% corp tax + 10% taper relief + 10% CGT = no good reason to run a Ltd.

And don't forget all the accountancy fees and hassle.

F*** it.

[ASB]

20% corp tax + 10% taper relief + 10% CGT = no good reason to run a Ltd.

And don't forget all the accountancy fees and hassle.

F*** it.

Maybe, but when I stopped contracting after 20+ years and got a "proper job" I had handed over about 500k less to the government than if I had been employed at a similar salary (which I wouldn't have been).

[THEPUMA]

20% corp tax + 10% taper relief + 10% CGT = no good reason to run a Ltd.

And don't forget all the accountancy fees and hassle.

F*** it.

The marginal cost of extracting £1,000 in income from your limited assuming 21% corporation tax and 10% CGT is £289.

The marginal cost of extracting £1,000 from an employer assuming you are a higher rate taxpayer suffering 12.8% employer's NI and 1% employee's NI is £477.

This disregards the additional benefits of the VAT flat rate scheme, CGT annual exemption, avoiding 11% employee's NI between £5,460 and £40,040 pa, deferring tax by leaving the excess over the higher rate threshold in the company and using your spouse's allowances.

= lots of good reasons to run a Ltd.

[smalldog]

buy commercial property.....depends on your risk profile of course...worst thing you can do is leave it in there til year end and then get hit with CT on profits. Dont forget tho that investing in commercial property only delays paying the tax, at some point you are likely to liquidate and will then pay CGT on the profits. Well technically companies dont pay CGT, its declared as profit on which you pay corp tax....

[ratewhore]

1) Draw the cash and pay the tax accepting that you are in tohe top 5-10% of earners and possibly shouldn't be whining - especially given if you are efficient as to how you do it you will still be paying in total roughly half of what a permie earning about 70% of the usual rate would be.

Too right. Far too many people here arsing about trying to shave a few quid off their tax bill.

Take the money out if you want it, pay your tax bill, count yourself lucky this is your biggest problem...

[DGA]

I am in the same position. My plan is to take a large dividend and use the money to pay off a nice chunk of the mortgage. I believe the paying the extra tax on the dividends is better than paying intestest on the mortgage given the state of the mortgage market at the moment...

[aceboy]

I am in the same position. My plan is to take a large dividend and use the money to pay off a nice chunk of the mortgage. I believe the paying the extra tax on the dividends is better than paying intestest on the mortgage given the state of the mortgage market at the moment...

Sound like a good idea

[too_many_details]

Pension

I'm in a similar situation. I know I need to take out more so will end up being in the higher rate tax bracket.

Can someone clarify whether then I should make pension contributions from the company or personally?

Yes, I have looked at other posts but still was unsure. Can I do both?

Cheers

TMD