Reply to: Dividends Salary Investments - Stupid questions!

[jmo21]

Which one (s) pay more than that?

Mine are with Aldermore
Business Savings Accounts - Aldermore Bank

[sal]

Which one (s) pay more than that?

Most fixed savings accounts will, like this one from VM 1-year fix at 1.75%

[CryingSheep]

My worst business savings account pays my co 1%

Which one (s) pay more than that?

[jmo21]

Pay your corporation tax early and get 0.5% interest on that.

My worst business savings account pays my co 1%

[RyanDS]

Is it ok to keep company money (even the money due for CT and VAT) on a company savings account, no?

This usually pays 1% a year at best but still...

Pay your corporation tax early and get 0.5% interest on that.

[CryingSheep]

Sure, you can have a savings account but the OP said Invest in. which I took to mean something other than a bog-standard business savings account.

But the rates are so low it's going to make very little difference in the great big scheme of things.

Yes, I agree... was thinking about companies accumulating money for several years. 1% always helps to minimise the 'lost' due to inflation...

[sal]

Sure, you can have a savings account but the OP said Invest in. which I took to mean something other than a bog-standard business savings account.

But the rates are so low it's going to make very little difference in the great big scheme of things.

With all due respect OP doesn't really know what s(he) is talking about. Investing is long term game, looks like OP is mainly interested in "harnessing" the money due to Hector with quick access when the VAT/CT bill is due. To which the only viable option is a savings account.

RateSetter (or similar) - allows Ltd Co investment accounts and potentially better returns (your Ltd's cash is at risk, etc...)

Ratesetter and similar P2P lending schemes are in decline. It's getting harder and harder to get your money out, when you add in the inherent risk of losing the capital, not really something I would recommend putting CT/VAT money into.

[tomtomagain]

Is it ok to keep company money (even the money due for CT and VAT) on a company savings account, no?

Sure, you can have a savings account but the OP said Invest in. which I took to mean something other than a bog-standard business savings account.

But the rates are so low it's going to make very little difference in the great big scheme of things.

[Spoiler]

Is it ok to keep company money (even the money due for CT and VAT) on a company savings account, no?

This usually pays 1% a year at best but still...

RateSetter (or similar) - allows Ltd Co investment accounts and potentially better returns (your Ltd's cash is at risk, etc...)

[CryingSheep]

This doesn't smell like an attempt to dodge tax at all!



No, there isn't.

Is it ok to keep company money (even the money due for CT and VAT) on a company savings account, no?

This usually pays 1% a year at best but still...

[CryingSheep]

Did they abolish the er-NI relief?

I wouldn't make said family members shareholders with just enough shares to get their dividends up to the tax threshold. Having them on the payroll in the first place is borderline already.

Agree

[sal]

Also the other thing is having loads of cash in the company is fine but oh man i want to see it working. Is there anything I can invest it in that doesn't incurr tax that is then easy to come back out of when it's time to pay VAT/corporation tax? always seems such a shame to leave it there idle waiting for the taxman.

You can put it into a savings account in YourCo name and get 1-2% interests. Everything else is rarely worth the hassle.

[sal]

Usually the best option is to pay a salary bellow the NI threshold, that for the current year is 8,632£ even though you will probably have a free income tax allowance of 11,500£.

Then you have a 2000£ tax free dividend and also if your income is 8,632£ the difference to 11,500£ can be paid as tax free dividend. (if you dont have any other sources of income, they all add up) Don't forget that as soon as you pass the NI threshold you will be hit by personal and company NI contributions with will put you worse off compared to 19% corporation tax and 7.5% dividend tax when paying dividend.

The most efficient way would be to pay all the 4 employees a yearly salary of 8,632£ and the rest in dividend divided by the 4. Don't forget that above 34,500£ individual dividend tax changes from 7.5% to 32.5%.

If you don't feel comfortable you should get an accountant, but this is the typical scenario they will probably put you on...

And as someone mentioned before, you must be asked why you're paying salary to the other 3, so they actually need to have some contribution to the company (income, paper work, other...)

Did they abolish the er-NI relief?

I wouldn't make said family members shareholders with just enough shares to get their dividends up to the tax threshold. Having them on the payroll in the first place is borderline already.

[tomtomagain]

This doesn't smell like an attempt to dodge tax at all!

Also the other thing is having loads of cash in the company is fine but oh man i want to see it working. Is there anything I can invest it in that doesn't incurr tax that is then easy to come back out of when it's time to pay VAT/corporation tax? always seems such a shame to leave it there idle waiting for the taxman.

No, there isn't.

[Lance]

Don't listen to what someone further up this thread has said.

I'm not sure that's entirely fair.
Every poster has said the OP needs an accountant. With differing degrees of scepticism around the actual intention (which sound dodgy TBF).