Leaving warchest in company

[Smartie]

You're contradicting yourself. If you only take dividends up to the upper tax threshold limit and you have £100k, you HAVE to leave the bulk of it in the company.

Nope, company pension contributions, especially with the budget changes and if you're closer to retirement than leaving school is an attractive option.

[kal]

Make sure the loan doesn't exceed the HMRC limit on when to pay interest or not. Make sure you don't fall foul of the bed and breakfasting rules.

Noted, so if I make sure I pay it back within the 9 month timeframe, just use it as a one off 9 month buffer (i.e. no bed and breakfasting) I should be ok?

[TheCyclingProgrammer]

Yup, taking out the loan, repaying to avoid the 25% tax and then re-issuing is termed "bed and breakfasting" and isn't allowed.

See here

http://www.hmrc.gov.uk/budget2013/cl...s-loophole.pdf

I'm not sure that's what he was suggesting.

Nothing wrong with the plan as long as you time it correctly and pay it back within 9 months of your company year end.

If the loan is under £15k you can avoid bed and breakfasting provisions by waiting 30 days before taking another loan.

[TheCyclingProgrammer]

Noted, so if I make sure I pay it back within the 9 month timeframe, just use it as a one off 9 month buffer (i.e. no bed and breakfasting) I should be ok?

If you take the loan at the beginning of your company year then you've got up to 21 months to pay the loan back before incurring the CT charge. Hence why timing it right is important.

[kal]

I'm not sure that's what he was suggesting.

Nothing wrong with the plan as long as you time it correctly and pay it back within 9 months of your company year end.

If the loan is under £15k you can avoid bed and breakfasting provisions by waiting 30 days before taking another loan.

Aah right thanks, good to know.

[northernladuk]

Noted, so if I make sure I pay it back within the 9 month timeframe, just use it as a one off 9 month buffer (i.e. no bed and breakfasting) I should be ok?

I think you have the rules wrong. It's 9 months from year end. So if you take it at the beginning of a financial year you could get 12+9 months.

EDIT : Crap. Already been explained. Sorry

[psychocandy]

You're contradicting yourself. If you only take dividends up to the upper tax threshold limit and you have £100k, you HAVE to leave the bulk of it in the company.

True.

[d000hg]

Nope, company pension contributions, especially with the budget changes and if you're closer to retirement than leaving school is an attractive option.

That's a whole different topic, obviously the company can spend the money but I didn't want to confuse things. Pensions are different, you should NOT be putting your warchest in one!

[mudskipper]

And don't forget that if you go over £50K you'll lose your child benefit...

[TheCyclingProgrammer]

And don't forget that if you go over £50K you'll lose your child benefit...

Particularly annoying if you normally don't pay higher rate tax, but for one year you do (e.g. one off big dividend). You don't have to deregister though, you can just pay it back through your self-assessment.