From April

[Louisa@InTouch]

You could look at playing it safe and investing in fixed bonds - with interest as the return on this. Or investing in shares but this will be more risky on the returns.

As long as all of the investments are in the company name.

What you need to look at, is the rate of return more than what you would get personally, after paying taxes on the income.

For example, are you going to get a higher rate of return personally by leaving it in your business;

1 - not paying 32.5% personally (16/17 HR) on the dividend income (assuming HR tax payer in 16/17)
2 - paying 20% corporation tax instead
3 - potentially only 10% CGT rate on closure of your company (assuming no changes to the current rules), plus you'll have your capital gains annual exemption too of £11,100.

[siouxchief]

Whereas, if you don't personally need the funds and are looking to invest, the majority of the time your company could do this and also make the same returns. Then this would remain in the company to distribute at a later date.

Can you expand on this please Louisa as sounds interesting but not sure what you are specifically suggesting?

Thanks

[fool]

Interesting. Given it's a long term investment, looks like I'm better taking a short term, one off hit to release the capital and not have to pay 20% in corp tax every year (which could go up or down). Similarly the property is all mine rather than Ltd Co's, which means that it's easier to bequeath to family, etc. I'd rather take the initial tax hit but I could probably do with looking into the letting market as a whole in more detail as well.

Don't really get you.

You can be paying ~20% on the profits via corporation tax or you can be paying it on your income tax. I suspect, you'd be happier paying the former, as this won't mess with what you take out of the company to live on.

I'm actually leaning towards buying property in an Ltd but I'd rather fully understand the rules before I pull the trigger. Please do feel free to help us get there.

[LondonManc]

It can be done but it may not be as efficient depending on what you want to do. Someone asked this the other week and it appears it will still be inefficient after April but I see more and more articles popping up saying it's worth thinking about now. Gotta be careful as the ones that say yes tend to be related to the housing market. Nice article here.

Contractors’ Questions: Can I buy property via my limited company? :: Contractor UK

It's likely you would be better starting a new company and registering it as a SPV with the right SIC code as it may affect your ability to get finance. Decent article on that here.

Limited company buy to let mortgages

Interesting. Given it's a long term investment, looks like I'm better taking a short term, one off hit to release the capital and not have to pay 20% in corp tax every year (which could go up or down). Similarly the property is all mine rather than Ltd Co's, which means that it's easier to bequeath to family, etc. I'd rather take the initial tax hit but I could probably do with looking into the letting market as a whole in more detail as well.

[northernladuk]

Thanks.

I'm looking at investing in property in the shorter term - are you saying that it would be ok to do that via my ltd co? Thought that would invalidate the industry code, or could I start Ltd Co 2 with capital from Ltd Co and do it that way?

It can be done but it may not be as efficient depending on what you want to do. Someone asked this the other week and it appears it will still be inefficient after April but I see more and more articles popping up saying it's worth thinking about now. Gotta be careful as the ones that say yes tend to be related to the housing market. Nice article here.

Contractors’ Questions: Can I buy property via my limited company? :: Contractor UK

It's likely you would be better starting a new company and registering it as a SPV with the right SIC code as it may affect your ability to get finance. Decent article on that here.

Limited company buy to let mortgages

[LondonManc]

Only thing to consider is the funds you would get personally, would be less tax.

Whereas, if you don't personally need the funds and are looking to invest, the majority of the time your company could do this and also make the same returns. Then this would remain in the company to distribute at a later date.

You consider more future plans, such as pension contributions. An expense for the business giving you the corporation tax relief and you'll get it personally on retirement.

Thanks.

I'm looking at investing in property in the shorter term - are you saying that it would be ok to do that via my ltd co? Thought that would invalidate the industry code, or could I start Ltd Co 2 with capital from Ltd Co and do it that way?

[Louisa@InTouch]

Thanks Louisa, I suspected it might be a horses for courses. I don't mind hitting the higher tax rate because I'd rather my money be working for me in other ways, take the hit on the tax and have it increase in value rather than stagnate in Ltd bank account

Only thing to consider is the funds you would get personally, would be less tax.

Whereas, if you don't personally need the funds and are looking to invest, the majority of the time your company could do this and also make the same returns. Then this would remain in the company to distribute at a later date.

You consider more future plans, such as pension contributions. An expense for the business giving you the corporation tax relief and you'll get it personally on retirement.

[northernladuk]

Toddle off and get back to scaring n00bs.

That's what I was trying to do

[LondonManc]

It would be a case by case basis. There is no hard and fast rule.

<snip>

In short your question is a little too general - so 'how long is a piece of string?'

Thanks Louisa, I suspected it might be a horses for courses. I don't mind hitting the higher tax rate because I'd rather my money be working for me in other ways, take the hit on the tax and have it increase in value rather than stagnate in Ltd bank account.

The shame of being told your thread is rubbish and should be in General by one our esteemed accountants..... Lol

Now then, let's clarify this. I asked an accounting question and got the answer that I pretty much expected. It was a broad question but necessarily so.

Toddle off and get back to scaring n00bs.

[northernladuk]

In short your question is a little too general - so 'how long is a piece of string?'

The shame of being told your thread is rubbish and should be in General by one our esteemed accountants..... Lol

[Louisa@InTouch]

It would be a case by case basis. There is no hard and fast rule.

For example, your circumstances would depend on your IR35 status and what you need to take out to live on...

You should absolutely maximise your basic rate band for both years. If you don't need anything above the BR bands, you would be taking out the funds unnecessarily with the consequence of a larger tax bill!

Not sure if you are looking to take out your surplus funds or to strike the right balance between salary/dividends or between dividends now/post April. On the last point, there are some simple rules to follow which we'll be releasing shortly.

In short your question is a little too general - so 'how long is a piece of string?'

[LondonManc]

How about getting yours to do it?

Considering it but why not ask if that's the case rather than paying extra?
Are you cut out to be a northerner?

[northernladuk]

How about getting yours to do it?

[LondonManc]

Thinking of keeping my warchest outside of Ltd company account (beyond the required amount of, say, 1 year salary + tax liabilities).

Have any of the accountants on here run any analysis on what a sweet spot would be (as in taking, say, £30k as salary) or would that be too difficult to do on anything but a case-by-case basis (depending on day rate, number of directors, etc)? Just doing some forward planning.