What to do with surplus cash in business?

[stphnstevey]

Struggling to find any decent business savings accounts at the moment and I have a large pot of money stuck in the business earning a pitiful 1%

Maxed out pension, salary dividend payments where pay little or no tax, but still have a large sum stuck in the company

I've looked for new accounts but there really does not seem to be much out there

[TheCyclingProgrammer]

Have you searched? This has been discussed several times recently.

Unless you really need the money, I'd say be happy that business is doing well and that you have a very healthy warchest to keep you going. The surplus will be yours one day. If and when you decide to call it a day and shut up shop to do something else or take on a permie role or possibly even take an extended break, you'll be able to liquidate and get the surplus out as a tax efficient capital distribution (assuming you're eligible for ER).

[northernladuk]

It's a problem we all face and there is no quick answer. If there was it would be in the standard guides and we would all be doing it. If you are not already you could make sure you divi the max amount to yourself right at the beginning of the year and put it in a high interest account and filter it to yourself as you need it through the year.

You could also take a directors loan up to the value of 10k and put it somewhere to earn some interest but be very careful you don't mess the rules up as it will end up costing you more than you make if you cock up.

Loads of other options that don't amount to much have been mentioned in the other threads.

[Maslins]

It's a problem we all face and there is no quick answer.

Oh the hard life you contractors lead. "I have so much cash I simply don't know what to do with all of it...HELP!!!"

[CloudWalker]

[ChimpMaster]

Legend has it that your company can give you personal responsibility to 'hold' the funds in your own personal account - purpose being to offset against your mortgage payments.

Not that I have done this but I'm sure I read it here many moons ago.

[TheFaQQer]

Legend has it that your company can give you personal responsibility to 'hold' the funds in your own personal account - purpose being to offset against your mortgage payments.

Not that I have done this but I'm sure I read it here many moons ago.

ThePUMA was the accountant that advocated doing this. (S)He is the only accountant I've seen advocate it, and hasn't been seen around these parts for a while.

[eek]

ThePUMA was the accountant that advocated doing this. (S)He is the only accountant I've seen advocate it, and hasn't been seen around these parts for a while.

His argument was that as the banks looked iffy you could justify it as it was a safer option than keeping the money in the bank. The theory was based on how banks would settle things in the case of a bank going tits up...

As its highly unlikely any bank is going tits up in the near future I wouldn't recommend arguing the point...

[ChimpMaster]

His argument was that as the banks looked iffy you could justify it as it was a safer option than keeping the money in the bank. The theory was based on how banks would settle things in the case of a bank going tits up...

As its highly unlikely any bank is going tits up in the near future I wouldn't recommend arguing the point...

Out of the box thinking here then: there must be a point at which it becomes financially advantageous to borrow from your own Ltd Co and use that in your personal account to offset the mortgage. So you would pay the Ltd Co a commercial rate of interest (3%? 4%?) to avoid BIK - an amount on which the Ltd Co pays corp. tax on (and the rest is yours as per normal profit), but then you offset (hopefully) a large chunk of your mortgage.

I suppose it depends on what rate you are paying on your mortgage - perhaps it's more beneficial against a BTL mortgage.

And of course you have to bear in mind how long you can do this and ensure you don't hold the loan 9 months past the Ltd's FY end.

You can see I'm having a slow day at work and instead enjoying the challenge of financial planning

[TheCyclingProgrammer]

Re: above. There probably is a point at which using a chunk of company money to offset your mortgage is beneficial but the s455 tax does limit how much you can use.

As you said it has to be paid back within 9 months and you can't just take the loan out again without being caught by bed and breakfasting provisions. BUT, you can escape being caught by B&B rules if you wait 30 days AND the loan doesn't exceed £15k. So you could potentially keep doing it up to £15k with a small gap every 21 months.