Investing Company Profits/Savings

[ASB]

No, a Consumer Credit Licence is not required.

Is it a new thing specific to Peer to peer which has removed the requirement ? Previously any lending to business didn't need a licence but any lending to consumers did. Presumably the FSA take the view, now, that the fact the P2P middleman is licensed is good enough.

Also how does it work with the Flat Rate VAT scheme. ? I would hope that HMRC don't want to include it as part of turnover, but, unlike bank interest it is not specifically excluded (is it near enough to bank interest to count as the same?).

[d000hg]

You could look into P2P lending as an investment (like Zopa but investing through your company). I think ThinCats was one I looked at.

[chopper]

Yes, a Ratesetter account can be opened in a company name (I have done this).
No, a Consumer Credit Licence is not required.

The rate offered varies markedly throughout the day, I find early afternoon to be the time when the rate available is highest, however it is probably worth telling it you want to invest at a rate of 3.7% (or maybe 3.8%) and you should get a match up within 24 hours.

You will pay corporation tax on the returns, and then income tax/dividend tax when you draw it from the company to yourself. This may not be the most efficient for you. Subject to status quo. Home is at risk if you leave all windows and doors open and then go on holiday.

[ASB]

I would expect that a company needs some sort of consumer credit licence to engage in peer to peer lending. The added compliance requirements may make it difficult to find anybody to take corporate money in modest amounts.

[zoomfwd]

Some (including myself) put some spare company quids into RateSetter (peer to peer lending). There is a tiny tiny risk, but it only ties my money up for a month at a time and I have no problem getting the equivalent of 3.7% annual return. You can get a higher rate if you are happy tying your money up for longer.

Can I open an account in the company name with RateSetter (I use them personally but their FAQs say

Who can invest with RateSetter?

To invest with RateSetter you must:

- have a UK bank account, and
- be at least 18 years of age.

We will also need to be able to confirm your identity. We can usually do this automatically, but occasionally we will have to confirm details with you directly.

[northernladuk]

Thanks a lot guys! All makes very good sense. I hadn't really give enough though about the need to eventually get the money out of the company or making full use of my SIPP allowance.

One more question if I may: You mention building up a warchest of 12-24 months first, which sounds very sensible. Do you mean 12-24 months of normal living expenses (i.e. the amount I transfer from the LTD company to my personal account each month), or a larger number (i.e. closer to what I bill my clients each month).

Why would your warchest be related to what you bill you client though?? What you need to live on personally and what your company bills the client are two different things. Very basic concept of contracting you must learn quickly

The question you should be asking is is your 6 month warchest the absolute minimum you need to survive for 6 months or is it at the level you'd enjoy if you were still in a gig.... If that makes sense.

[chopper]

Some (including myself) put some spare company quids into RateSetter (peer to peer lending). There is a tiny tiny risk, but it only ties my money up for a month at a time and I have no problem getting the equivalent of 3.7% annual return. You can get a higher rate if you are happy tying your money up for longer.

[welshdragon82]

Thanks a lot guys! All makes very good sense. I hadn't really give enough though about the need to eventually get the money out of the company or making full use of my SIPP allowance.

One more question if I may: You mention building up a warchest of 12-24 months first, which sounds very sensible. Do you mean 12-24 months of normal living expenses (i.e. the amount I transfer from the LTD company to my personal account each month), or a larger number (i.e. closer to what I bill my clients each month).

[fool]

As others have stated, be sure to have your liabilities covered and a war chest that covers a resonable amount of time.

Beyond that I'd generally argue investing a surplus is a good idea. The first thing you can do is open up a SIPP and invest that. Then obviously invest extra money in the Ltd. I'd suggest you go with the boring slow and steady index funds, beyond that you're obviously aware of the risk.

[northernladuk]

Bear in mind this 'buffer' would likely belong to the tax man as you haven't paid any CT yet.

Best to build up a buffer for your war chest and accrued CT/VAT rather that risk blowing money that isn't yours at this early stage.

This. Get yourself a 6 to 12 month warchest above and beyond your tax liabilities and then start thinking what to do with the excess.

Look for high interest accounts before investing. Aldermore for example.

[stek]

Bear in mind this 'buffer' would likely belong to the tax man as you haven't paid any CT yet.

Best to build up a buffer for your war chest and accrued CT/VAT rather that risk blowing money that isn't yours at this early stage.

[syrio]

This has been discussed quite a bit.

https://www.google.co.uk/search?q=si...ng+ltd+company

Yes, it is possible. You can get Ltd company accounts from Selftrade, Interactive Investor, TD Direct, HL to name a few.

You will pay corporation tax on investment profits, although you do get an indexation allowance. If you build up large amounts of money in the company then you eventually face the problem of getting it out.

It is preferable to get as much money out as you can. Salary and dividends up to the higher rate tax, maximum contribution into a SIPP. Maybe have a warchest in the Ltd company that would cover you for a year or two, but keep that in cash or short term bonds unless you really want to invest it. You can find high(er) interest savings accounts but you will have to shop around.

[welshdragon82]

Apologies if I'm reposting something that has been answered many times before. It's my first post here.

I've been contracting for around 9 months now and have started to build up a nice buffer in my company account. My question is, what is the best thing to do with the profits. My bank offers savings accounts with pretty much non-existant interest rates. I would have though trying to put this money to work would be the right thing to do.

I'm not adverse to a little risk either, like investing in a fund/tracker/stocks (I do this personally already). But.....I'm not if that's possible for a LTD company, or if it is, where to start.

Any advice from others would be greatly appreciated.