Reply to: How to make the most of unclaimed dividends?

[THEPUMA]

There was something on here from one of the accountants (can't remember his name but he's based on Watford) that gives you a possible way via a deed of trust. I think the argument is that it offers better security for the companies money because if the bank disappeared the loan and savings would be totalled out but you could then repay the company by taking out another loan.

Yep that was me. It can be done from a tax perspective but whether or not the mortgage lender would allow it (if they found out about it) is another question.

PUMA

[Fred Bloggs]

If you're an old timer like me, it's a no brainer to use a SIPP. I recently paid in £60k to my SIPP and a few days later got a cheque back for £15k tax free, leaving £45k in the SIPP and no personal or ltd co tax paid at all. Not bad. Unfortunately, you now need to be >55, upto April 2010 it was >50.

[doodab]

You could buy a charter yacht or holiday property as an investment.

You could probably sponsor a motor racing team or other sporting endeavour as "marketing" if you were that way inclined.

[eek]

OK, did some research on the subject, does not look like it is going to work:
Stoozing Forum - Would it be possible

There was something on here from one of the accountants (can't remember his name but he's based on Watford) that gives you a possible way via a deed of trust. I think the argument is that it offers better security for the companies money because if the bank disappeared the loan and savings would be totalled out but you could then repay the company by taking out another loan.

[SallyPlanIT]

Never heard of it, can someone confirm if that's possible ? Wouldn't that result in BIK ?

HMRC states "By law, at the end of each tax year you must give HMRC particulars of any expenses payments, benefits and facilities provided to:
* Each employee or director earning at a rate of £8500 a year , or more and
* Each director earning at a rate of less than £8500 a year, unless they are a full-time working director with no material interest in the company"

Surely, this IS benefiting the director and therefore a P11d entry.

[Lumiere]

Never heard of it, can someone confirm if that's possible ? Wouldn't that result in BIK ?

OK, did some research on the subject, does not look like it is going to work:
Stoozing Forum - Would it be possible

[Moscow Mule]

Never heard of it, can someone confirm if that's possible ? Wouldn't that result in BIK ?

It's possible - some banks definitely offer it.

HOWEVER, it's open to a lot of interpretation if HMRC ever find out. If you google for

offset mortgage using ltd company funds

you'll find a link to another contractor site with an article about how it's pretty dodgy and the things they can catch you for...

[Lumiere]

If you don't mind being a bit fast and loose (I am not sure of the benefit in kind implications of this so ask your accountant), I believe some offset mortgages are available which will allow you to offset company funds against your personal mortgage.

Never heard of it, can someone confirm if that's possible ? Wouldn't that result in BIK ?

[Sergeant Murphys Cosh]

Open company bank accounts in different currencies and play the Forex market.

[Moscow Mule]

If you don't mind being a bit fast and loose (I am not sure of the benefit in kind implications of this so ask your accountant), I believe some offset mortgages are available which will allow you to offset company funds against your personal mortgage.

[richy]

I've read post from people who've bought rental properties beofre and they've not recommended it. There is no capital gains allowance for your Ltd, so you have pay CGT.

I keep my investments outside the Ltd and I keep the cash in the Ltd in the hightest paying savings accounts I can find (limit to 50K in each). I use the Ltd funds as my cash (safe) side of my investments.

Our ltd co is similar. We just switched from our ltd co 7-day scottish widows deposit to 120day Secure Trust business deposit account @ 3.21% ! That is better than most bonds

[moorfield]

What I wanted to know is how I can make the most of this money without taking it as a dividend? I can put so much into a pension, but what approaches do people have to make their money work for them?

1. Keep the retained earnings / warchest at a level which will cover minimum 6 months of benchtime.

2. SIPP contributions.

After that, I'm currently looking at the idea of putting surplus company money into preference shares
- these can yield at 6-7%+ and (I think) this income stream is free of corp tax. And more liquid and less
complicated than BTLs.

[simes]

Buying rentals though Ltd Co.

Yeah - you have to pay CT on rental profits and profits derived from the sale of the house, but you do have to pay CGT upon the sale if personally owned and income tax on personal income.

Another way of looking at it is, that at the time you wish to purchase a rental and you are already over the 40% tax bracket, buying it through the Ltd Co means you don't then subject yourself to 40% tax when finding the deposit.

Indeed, this is what I have recently done. A small one bed that required 35% deposit came to roughly £42k. I would have had to have found a further £30k the following year in SA taxes for the pleasure of that one.

If you think, no matter which way you slice it, tax will have to paid somewhere down the line, it may just come down to lots of tax deferral that makes your mind up.

[Stag Cozier]

I thought I'd ask this question to see what the general approach was to making the most of cash left in your own businesses (of you're operating as a LTD company).

I pay myself a salary and then take dividends from time to time. However I only take the amount of dividends to remain under the higher dividend tax threshold. This obviously means there is cash still left in the business, however if I took this I would be liable for a higher rate of tax.

What I wanted to know is how I can make the most of this money without taking it as a dividend? I can put so much into a pension, but what approaches do people have to make their money work for them?

Any thoughts and opinions would be welcomed.

Thanks

If you're married, have you explored gifting shares to your spouse so they can receive a dividend up to the higher rate threshold? What about getting the company to pay for your life insurance?

[Hex]

I've read post from people who've bought rental properties beofre and they've not recommended it. There is no capital gains allowance for your Ltd, so you have pay CGT.

I keep my investments outside the Ltd and I keep the cash in the Ltd in the hightest paying savings accounts I can find (limit to 50K in each). I use the Ltd funds as my cash (safe) side of my investments.