Reply to: What to do with surplus cash in business?

[Olly]

Yes, but you risk not being able to claim entrepreneur's relief when you close the shebang down.

From what I've read, Entrepreneurs' relief is not available to companies who've made more than 20% of their income through investment income.

Your account is correct, you "risk" it but that's a simplistic answer at best surely?

Let's say you have £100K in your Ltd and your profit is 80K, well if you can get more than a 20% return on your 100K then I'm all ears

Unfortunately this boat has sailed for me as my company is dormant and it grates that its 220K sits at 0.4% interest largely through my own apathy. I may have to do a few days moonlighting to offset even that pitiful interest to qualify for ER, though I'm hoping HMRC aren't so rigid when dealing with a company that's been dormant for 16 months.

[dmo]

What did you end up doing OP?

[d000hg]

Why do that when you can take the money as a loan and make a killing yourself?

Oh.

Quite.

This is what my accountant also stated, although it all depends on the income you're generating from a P2P lending scheme as well i.e. if you're only making a few hundred quid, it's unlikely ER will be affected. I had/have funds in Funding Circle.

I don't know much about ER but is the situation the income generated this way would be ineligible, or that you risk the entire company becoming so?

[DigitalUser]

Yes, but you risk not being able to claim entrepreneur's relief when you close the shebang down.

This is what my accountant also stated, although it all depends on the income you're generating from a P2P lending scheme as well i.e. if you're only making a few hundred quid, it's unlikely ER will be affected. I had/have funds in Funding Circle.

[TheFaQQer]

Can't a company invest their money in shares, or maybe Zopa?

Why do that when you can take the money as a loan and make a killing yourself?

Oh.

[JRCT]

I was looking on line at 'cheap' one bedroom flats that I could conceivably buy outright and rent out, to get me going with some kind of portfolio and I saw a lot of lock up garages in the city centre for sale. Prices from £15k to £40k ish.

A £20k garage was offering a monthly rental of c£150.

If you used it sometimes for your own business purposes and then rented it out other times, is that a more viable investment for your LTD than a buy-to-let flat?

[javadude]

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.

This is worth doing. I do it and it gets me a few hundred each year. I max out the cash and investment ISAs and put the rest in a high interest account.

[aoxomoxoa]

Can't a company invest their money in shares, or maybe Zopa?

Yes, but you risk not being able to claim entrepreneur's relief when you close the shebang down.

[JRCT]

Can a company put £20k on a horse, or more specifically Celtic to win the SPL, next year?

I think they were 1/50 at the start of last season. Probably similar odds this season, but that would give you a return of 2%. And they will win it at a canter.

[d000hg]

Can't a company invest their money in shares, or maybe Zopa?

[TheCyclingProgrammer]

£15k? I thought it was £10k?

£10k is the limit before the BIK/interest issue kicks in.

£15k is the limit at which you can take a new loan 30 days after repaying it and it not being considered an extension of the previous loan under the new bed and breakfasting rules. Loans above £15k can be potentially caught by the new rules no matter how long you leave if its clearly just an extension of the previous loan.

This is the best explanation I could find, sorry:
http://businessdatabase.indicator.co...702/44/related

A loan between £10-15k would mean you only have to consider the 30 day rule as far as bed and breakfasting rules go but you would indeed have to pay interest on a loan at this level (or incur a BIK) as usual.

IIRC, £15k is also the limit at which you can take a loan without full shareholder approval.

[TheFaQQer]

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.

£15k? I thought it was £10k?

[eek]

My wife is a director and I am considering if a company car might help in releasing some funds. For me, the mileage I do makes the mileage allowance preferable, but she does very little business mileage.

What does she actually do for the company to justify her salary let alone a car?

Regardless of that issue, you won't be any better off as she would end up paying for the benefit in kind at a higher rate than just pulling out a dividend payment....

Your best bet is to keep the money in the company and take entrepreneurs relief when you close it down

[stphnstevey]

My wife is a director and I am considering if a company car might help in releasing some funds. For me, the mileage I do makes the mileage allowance preferable, but she does very little business mileage.

[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.