Reply to: What do you do with your profit??

[Cheshire Cat]

ask dragonfly

So, you suggest that in the event of an IR35 investigation, Hector can only claim funds that are held in the business account (presumably on the day the investigation starts)?

I thought the whole point of IR35 was that it's HMRC's way of claiming that your company is a sham, and that it exists purely for you to evade tax that you would've paid had you been paid wholly via PAYE.

In that case, I would have thought Hector would present YOU with a tax bill for the tax due, rather than your company. If I'm wrong, this changes my understanding of IR35.
Instead of taking out insurance, contractors need simply pay all the retained profit as dividends, take the 25% hit on that and the revenue has no funds to chase. Please correct me if I'm missing the point.

[badger7579]

What's the risk of leaving in retained profits year after year to accumulate (after maximising the lower tax band obviously)?
Then drawing it out when you eventually close the company?

My original idea was to do this and build up the capital, take advantage of 10% entrepreneurs relief 10 years down the line (assuming no change in the law) and use the money as my pension fund rather than having a personal pension which don’t seem to give a good return IMO.

I'm maxing the lower tax band already... But I must admit the thought of spending it before a bank goes bust or I die is appealing

[pmeswani]

At your company year end what do most people do with the remaining profit in their company? Leave it there, take a portion of it out, take it all out?

I haven't reached my first year end, but I have so far put £2k into my pension and taken an emergency £2.4k in extra divis to cover a few things that I need to do sooner rather than later.

[EternalOptimist]

What's the risk of leaving in retained profits year after year to accumulate (after maximising the lower tax band obviously)?
Then drawing it out when you eventually close the company?

ask dragonfly

[Pickle2]

What's the risk of leaving in retained profits year after year to accumulate (after maximising the lower tax band obviously)?
Then drawing it out when you eventually close the company?

The bank you keep it in goes bust.

You die before you get to close down the company and spend it.

But other than that, nothing. Its what most contractors who are still quite a bit from retirement age do surely? Otherwise you have to give the tax man a quater of everything > UEL, instead of 10%.

[Cheshire Cat]

What's the risk of leaving in retained profits year after year to accumulate (after maximising the lower tax band obviously)?
Then drawing it out when you eventually close the company?

[EternalOptimist]

I take it all out asap.

I keep getting a bollocking from my accountant, but I thinks he's just scared because I dont even leave enough in to cover his bill at year end.

[badger7579]

Yes but then I wouldn't receive the massive intellectual contribution I receive from CUK... That would be a crime

[Bagpuss]

This is a revolutionary idea, but, why not ask your accountant? After all he is more familiar with your tax position than we are.

[Spacecadet]

Any chance of a constructive answer????

1) load gun
2) shoot

This is CUK!!

i make sure there are no left over profits

[badger7579]

Any chance of a constructive answer????

1) load gun
2) shoot

[Xenophon]

Doesn't all the shrapnel get in your crevices???

No.

breast stroke?

Yes.

That made me snort

Snort-laugh! Always an embarrassing one.

[oracleslave]

I take it all out in cash, throw it on the bed, and swim around in it.

Naked.

That made me snort

[Bagpuss]

I like to take it out to a nice restaurant

[DS23]

breast stroke?