What to do with the left over limited company income

[Olly]

Do you?

What if I only ever pay myself a wage under the NI threshold and only ever take divis to the max amount (currently 42475 in total for both elements including divi credit) before paying more tax?

Exactly the same "plan" I have. If in later years I choose to start putting some into a pension then that option is there. If I need a lump sum I can take the tax hit. If I go perm I can wind up the company and pay 10%(ish)
In the meantime my company is investing a fleet of classic motor bikes and will loan me money to put in my offset mortgage

Simples

[ddolheguy]

Do you?

What if I only ever pay myself a wage under the NI threshold and only ever take divis to the max amount (currently 42475 in total for both elements including divi credit) before paying more tax?

The tax has been paid. There is nothing left to pay. Or am I missing something fundamental.

The super long term plan for me, since basiically every year I contract i get two years of wage/divis (at the amount i suggested above) is to work for another x years and then semi-retire potting about for my ltd co doing "something".. like posting on these forums.

Oh course you have to pay Corporate Tax on the profits each year also (which includes your divs), which is a hit of 20% (ouch).

[northernladuk]

Exactly the same "plan" I have. If in later years I choose to start putting some into a pension then that option is there. If I need a lump sum I can take the tax hit. If I go perm I can wind up the company and pay 10%(ish)
In the meantime my company is investing a fleet of classic motor bikes and will loan me money to put in my offset mortgage

Simples

So you went ahead and did this then. Only the OP actually agreed it may possibly work with everyone else throwing up warnings? And loaning yourself the money from the company? You don't half run a fine line!!!

http://forums.contractoruk.com/accou...lection-3.html

[Olly]

So you went ahead and did this then. Only the OP actually agreed it may possibly work with everyone else throwing up warnings? And loaning yourself the money from the company? You don't half run a fine line!!!

http://forums.contractoruk.com/accou...lection-3.html

Zip it!
There were two posts that didn't talk about what bikes are cool or an investment etc.

1. Justifying to HMRC that the collection is a business interest (should they come asking) which should be rational to overcome
2. The collection will be a company asset and not yours so will need more specialist insurance, storage and if they were to be used in any way I don't know how that would be treated, Benefit in Kind?
3. If sold the profits are company profits and not yours
4. If you close the company then the collection would have to be sold for a fair price as company assets

AND

I'd love to indulge in something like this at my company's expense but my concern is that this would be seen as a loss making hobby than a legitimate company investment.

Also, what business use could we claim for the bikes? Would we ever ride them? Would this be business or private mileage? Or would we just fudge over this and not declare it? Park the bikes and never ride them?

I really doubt that HMRC would see it as a legitimate business expense especially if it's completely unrelated to the company's core business.

So I've done it, used company money to buy a classic bike, I sold it and my Ltd made a profit, my Ltd now owns another bike and will buy more. It's very much a sideline and purely and investment tool - like buying gold or art.

Regarding lending money to myself - pray tell what on earth you think is wrong with that?

You really do wind me up, I seldom comment but then again I seldom post and when I do you've put your foot it in it once before.

[northernladuk]

Zip it!
There were two posts that didn't talk about what bikes are cool or an investment etc.

1. Justifying to HMRC that the collection is a business interest (should they come asking) which should be rational to overcome
2. The collection will be a company asset and not yours so will need more specialist insurance, storage and if they were to be used in any way I don't know how that would be treated, Benefit in Kind?
3. If sold the profits are company profits and not yours
4. If you close the company then the collection would have to be sold for a fair price as company assets

AND

I'd love to indulge in something like this at my company's expense but my concern is that this would be seen as a loss making hobby than a legitimate company investment.

Also, what business use could we claim for the bikes? Would we ever ride them? Would this be business or private mileage? Or would we just fudge over this and not declare it? Park the bikes and never ride them?

I really doubt that HMRC would see it as a legitimate business expense especially if it's completely unrelated to the company's core business.

So I've done it, used company money to buy a classic bike, I sold it and my Ltd made a profit, my Ltd now owns another bike and will buy more. It's very much a sideline and purely and investment tool - like buying gold or art.

Regarding lending money to myself - pray tell what on earth you think is wrong with that?

You really do wind me up, I seldom comment but then again I seldom post and when I do you've put your foot it in it once before.

And they were about the only posts that actually talked about the business end although it was a good discussion about old bikes. You made a profit well done, why pray tell did you only buy one bike and sold it for profit out of company money incurring tax? Why not with your own? Just out of interest of course.

[Wanderer]

Surely you have to pay the tax at some point anyway so why leave it there if you need it?

If you need the money then you take it out and pay the higher rate tax. But if you don't need it immediately then it may be worth retaining it.

If a contractor takes a break from work, becomes ill, takes a big pay cut or for whatever reason they earns less than the higher rate threshold for some future tax year then they can draw on funds retained in the company to top up their income and not incur the higher rate tax penalty.

Retained funds could also be used as capital to expand the business at some future date - we are all business people, right?

[Olly]

And they were about the only posts that actually talked about the business end although it was a good discussion about old bikes. You made a profit well done, why pray tell did you only buy one bike and sold it for profit out of company money incurring tax? Why not with your own? Just out of interest of course.

I'm sure you can think about a few plausible reasons?

Over time I hope to invest a decent amount of Ltd money in bikes, it's what I know about, whereas I know diddly about shares.

No comment re-lending money to self .....noted