Company Savings Account

[Bones]

This really did used to be worthwhile when the rate was 8%ish

So any idea what HMRC are paying as interest today, 0.5% perhaps?

[ASB]

That was more what I was getting at, I know where I can put the money the issue was staying on the right side of HMRC. I just wondered if there was any legitimate way of moving the money to a more favorable account. If it sits in a bank account why cant it still belong to the company? (e.g. TSB will shortly be opening accounts that pay 5% on balances up to £2000). I will have a look at the rules for directors loans to see if there is any potential there.
Shirley it been thought of before!?

The problem with directors loan is the s455 tax. Search on this site for deed of trust and look at the posts by thepuma. Despite the substantial criticism he knows what he is talking about.

you can then widen your search onto other sites.

the holder of an asset and the beneficial owner thereof are different things.

but, you have to factor in the cost of correctly drawing up and executi g the trust deed which could well exceed any potential cost savings.

[Contreras]

That was more what I was getting at, I know where I can put the money the issue was staying on the right side of HMRC. I just wondered if there was any legitimate way of moving the money to a more favorable account. If it sits in a bank account why cant it still belong to the company? (e.g. TSB will shortly be opening accounts that pay 5% on balances up to £2000). I will have a look at the rules for directors loans to see if there is any potential there.
Shirley it been thought of before!?

Yes, the legitimate way is YourCo makes you a loan of the money which you invest in a 'high' interest account before you eventually pay it back. If the loan is still outstanding 90 (?) days after the company year end then HMRC will hit you with a whopping 25% tax charge. For this reason alone don't do it without discussing with your accountant first and don't even consider it if you might be tempted to dip into the loan to cover personal expenses.

Assuming the sum is >£5k then you need to pay interest at an HMRC defined rate (4% ?) to YourCo for the loan, which becomes additional profit to YourCo. In effect it costs you 20% (CT) x 4% = 0.8% so the personal account needs to be 0.8%+ higher than a business savings account for it to be worth the hassle, good luck with that.

Try these for business savings:

Best corporate bank savings accounts interest rates for business ltd limited plc public limited companies
Compare Business Accounts, Commercial Mortgages & Loans
Best Business Savings Accounts Comparison at MoneySuperMarket

[barrydidit]

So any idea what HMRC are paying as interest today, 0.5% perhaps?

Good guess. Better than HSBC's 0.02%, and it's certainly Hector friendly

More details:
HM Revenue & Customs: Interest paid when Corporation Tax is overpaid or paid early.

[TheFaQQer]

Aldermore have a 1.1% easy access savings account.

+1

They also have a flexible fixed rate account, where you choose the interest rate and it gives you a lock-in date, or you give them the lock-in date and they give you a percentage rate. I've locked away my guess for this year's corporation tax until the summer...

[northernladuk]

+1

They also have a flexible fixed rate account, where you choose the interest rate and it gives you a lock-in date, or you give them the lock-in date and they give you a percentage rate. I've locked away my guess for this year's corporation tax until the summer...

Loving the slider on this page lol...

Fixed Rate Business Savings Calculator - Aldermore Business Savings

[jmo21]

+1

They also have a flexible fixed rate account, where you choose the interest rate and it gives you a lock-in date, or you give them the lock-in date and they give you a percentage rate. I've locked away my guess for this year's corporation tax until the summer...

just set up 2 of these, one with my guesstimated corp tax ending a couple of weeks before it is due.

Loving the slider on this page lol...

Fixed Rate Business Savings Calculator - Aldermore Business Savings

I thought the exact same this morning!

[Bones]

Thanks everyone for your suggestions but the problem is that all of the options are for 'investing' one off lump sums. However Corporation tax and VAT build up slowly over time so its a complete miss match. It was a good idea but completely impracticable in reality, shame really

[ctdctd]

Loving the slider on this page lol...

Fixed Rate Business Savings Calculator - Aldermore Business Savings

That is possibly the best thing I have ever seen on the Internet
(But I don't get out a lot)

[TheCyclingProgrammer]

Thanks everyone for your suggestions but the problem is that all of the options are for 'investing' one off lump sums. However Corporation tax and VAT build up slowly over time so its a complete miss match. It was a good idea but completely impracticable in reality, shame really

Whilst that's true, if you've built up enough retained profit in YourCo, over and above what you need for a war chest (which you ideally want to keep readily available), then there's no reason you can't put a chunk aside from your existing retained profit for your future CT bill, based on a reasonable estimate of what it will be.