Alternative Company Saving Account

[MarillionFan]

but the recognised HMRC rate you should be paying on the loan is higher than any bank account i know of....
Yes, of course you can break the law and just cough up when/if you get caught.
I don't think it's particularly unreasonable that many of us prefer to run our businesses legally.

Again. I don't think you're getting it. Your loss, nothing illegal. Thats why I have an accountant. Sounds like yours aint that good.

Take care.

MF

[Olly]

You're right I don't get it...

So you take a director's loan which you're supposed to pay interest on.
Is that right so far?

Except you don't pay interest on it
Am I still understanding it correctly?

My accountants are a bit crap you're right. But it seems unlikely they'd have got this one so wrong.

[MarillionFan]

You're right I don't get it...

So you take a director's loan which you're supposed to pay interest on.
Is that right so far?

Except you don't pay interest on it
Am I still understanding it correctly?

My accountants are a bit crap you're right. But it seems unlikely they'd have got this one so wrong.

What I am saying is, you can put the money into a personal interest account. Then your accountant can decide where you pay the interest. Either directors or against the LTD depending on the amount/interest etc.

Is that clear now?

[Olly]

What I am saying is, you can put the money into a personal interest account. Then your accountant can decide where you pay the interest. Either directors or against the LTD depending on the amount/interest etc.

Is that clear now?

Um nope, not at all
I'd like to understand though, always on the look out to eek a few more dollars from the Ltd setup.

I've been advised by at least 2 accountants that directors loans over 5K should incur interest at the HMRC rate. Worse than that, any interest you do pay to your Ltd of course attracts corporation tax. I can't for the life of me think of a way to bend that seemingly hard and fast rule and be personally better off.

[MarillionFan]

Um nope, not at all
I'd like to understand though, always on the look out to eek a few more dollars from the Ltd setup.

I've been advised by at least 2 accountants that directors loans over 5K should incur interest at the HMRC rate. Worse than that, any interest you do pay to your Ltd of course attracts corporation tax. I can't for the life of me think of a way to bend that seemingly hard and fast rule and be personally better off.

Sorry I wasnt clear. We're not talking a huge amount of cash here. Of course you would have to pay corporation tax. I have always had directors loans of 5k at 0%. My wife is also a director.

Then anything over is back into the business and appears as profit and then taxed accordingly(or helps to pay the accountant!)

The questions was, where is the best interest at the moment. And the answer is an A&L personal account at 2.75%. If you have a business account paying 0.1%, then you would be automatically better off to move the money about.

With interest rates so low it's nominal, but a few years ago at 5/6% it was worth quite a bit.

[Olly]

Arghhhhhh....... I said over 5K in my first post!

Are you drinking?

[MarillionFan]

Arghhhhhh....... I said over 5K in my first post!

Are you drinking?

Sorry. Yes. Chardonnay

[Support Monkey]

Arghhhhhh....... I said over 5K in my first post!

Are you drinking?

Arghhhhhh....... the directors loan is no longer company money, this was my point, the way you said it sounded like you where advising transfering all your cash to a personal account, its not illegal to transfer a director loan to a personal bank account because when it is loaned it is your money until you pay it back the same as any other loan.

Glad you all sorted that out, thankfully it was the Chardonnay talking

[chavvy]

Let me get this straight: I have 150k sitting there earning zero interest I can:

a) lend myself lots of money (I can do what I like with this money), but I will have to pay 4.75%. Who will I pay this interest to? my Ltd company? if so this profit will then get taxed at (e.g.) 30% and I am just paying 4.75*.3=1.425% to the IR. Have I got this right?

b) Find a business bank account that pays a decent rate: Do these exist?

c) Lend myself the money and not tell anyone. If I get caught refer to a) for what I owe. Not sure if my accountant would be happy with this though.

If my current contract pans out, I could be adding to my war chest for years and getting zero interest, I could end up with £250k and with inflation running at 5% thats a significant year on year devaluation of its actual worth. It doesn't seem right that a company can't earn interest on its capital.

[eek]

I'm sure someone came up with a method using a deed of trust that allowed company money to be placed in a personal account (my memory seems to recollect it being connected to an offset mortgage).

The reason for doing so was not the amount of interest being paid but the additional security that was available from doing so.

It probably only works with an offset mortgage.