Retained profit and ISAs

[MrRobin]

There is no additional corporation tax to pay, it is personal income tax that you would be paying. there are no other legitimate options to withdraw money for your own personal use, without paying additional tax.

There are many arguments for and against taking money out of the business warchest and into a personal warchest, which you can read at length by doing a search of the forums.

Some say the 25% hit is worth it because if you find a good investment then you will make it back in a few years and then the money is yours, and don't have to worry about any changes in corporate and dividend tax law etc etc.

Some say that it's better to keep the money in the business account and just use it to pay yourself up to the 40% rate, and you can do this even when you're not gigging because there is a surplus

Some say you should close down the company using ESC C16 and apply for entrepreneurial relief on the capital gains

Do your own research, get advice from a qualified accountant etc etc.

[Rangster]

Apologies for posting in the wrong sections. Mods could you please move to accounting?

[Rangster]

Hi all,

I was wondering if people take their full allowances for themselves and partners out as dividends to invest in ISAs at 10k each? Not sure if this makes sense financially once you factor in the additional corporation tax.

Also wondering how much of a war chest that people sit on in case of non work? I currently have £40k but it seems quite a lot to sit their doing nothing. I like the security (e.g. not working at the moment) but not sure what other options would be available without incurring Corporation Tax

Would be interested to hear how others play it. As you can tell, I am relatively financially naive!

Thanks