Plan A funding Plan B

[Mustang]

If I want to provide capital from Plan A into Plan B, what is the best way of doing this? Can I essential use plan A capital to buy shares in Plan B or is it better (for whatever reason) for both companies that have been set up for Plan A Co to loan the money to Plan B co?

Would people advise against this and transfer all monies via my personal account in the form of dividends from Plan A and my own investment into Plan B?

Any thoughts on the above? Has anyone done this type of thing?

TIA

[pmeswani]

If I want to provide capital from Plan A into Plan B, what is the best way of doing this? Can I essential use plan A capital to buy shares in Plan B or is it better (for whatever reason) for both companies that have been set up for Plan A Co to loan the money to Plan B co?

Would people advise against this and transfer all monies via my personal account in the form of dividends from Plan A and my own investment into Plan B?

Any thoughts on the above? Has anyone done this type of thing?

TIA

Personally, I would do it from your personal account. That way, if company A goes Pete Tong, company B doesn't suffer. (Unless I misunderstood).

[DeludedAussie]

Personally, I would do it from your personal account. That way, if company A goes Pete Tong, company B doesn't suffer. (Unless I misunderstood).

I would it from company A assuming company A has a lot of funds on account and not being used.

If it all goes wrong you lose your money but you have not paid personal tax to withdraw it. If it all goes well then you have the extra income

[XLMonkey]

Assuming that Plan B is also a limited company, then there are two options:
1. Lend the money from one company to the other. You can do this on an interest-free, no strings attached basis; but you need to declare this on Plan A company's annual return. There are certain rules that you need to be careful of if you need to write off any loss that is made on the loan. However, if Plan B is successful then you just repay the loan once it is able to do so.

2. Plan A company takes out shares in plan B company in order to provide the capital. This can be more tax efficient, depending on the nature of your Plan B, but involves a bit more paperwork and gets fiddly if/when you wind either company up.

I did the second option on a venture last year, which was not successful. With the benefit of hindsight, it would have been easier to just do it as a company loan.

I wouldn't take the money out of the Plan A company to invest it personally in Plan B company: this is almost certainly less tax efficient (if you are a higher rate tax payer). Going company to company means that, if Plan B fails, you will not have to pay the higher rate tax on the investment. Going individual to company means that you will.