IMPORTANT! This is MoneySavingExpert's open forum - anyone can post

Please exercise caution & report any spam, illegal, offensive, racist, libellous post to forumteam@moneysavingexpert.com

  • Be nice to all MoneySavers
  • All the best tips go in the MoneySavingExpert weekly email

    Plus all the new guides, deals & loopholes

  • No spam/referral links
or Login with Facebook
Can I put business money into an ISA?
Closed Thread
Views: 2,904
Thread Tools Search this Thread Display Modes
# 1
jacu2010
Old 03-11-2010, 12:29 PM
MoneySaving Newbie
 
Join Date: Nov 2010
Posts: 3
Post Can I put business money into an ISA?

I'm a sole trader with a small business.
To date I have not taken any income from the business but am slowly building up a cash cushion.
But, by doing that, I'm getting quite a large balance in the current account I use for my business and want to move some of that cash into a savings account so that I get a better rate of interest on it until such time as I either use the money to make further business purchases or decide to take some/all of it as income (in which case I'd declare it and pay tax on it in the usual way).
Can I put that "spare" business cash into an ISA?
I see that I'll be using up my personal allowance (5100 per annum) with business money, but am unlikely to use up my allowance with 'personal' money this year so not too bothered by that.
Does it matter though, that the same ISA would contain some 'personal' money and some 'business' money? Or, would it be better to have a separate ISA for the business money so the two pots did not get mixed?
Are there tax rules that say you cannot put business money into an ISA?
I'm thinking that as long as I keep good records of where the business money is stored it shouldn't be a problem.....but have a sneaking suspicion that there might be rules against this but can't find any information about it.

Anyone know?
Thanks
jacu2010 is offline
Report Post
# 2
Baldur
Old 03-11-2010, 12:48 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Oct 2006
Posts: 6,473
Default

An ISA is an Individual Savings Account, and you make a declaration on opening one to the effect that "All subscriptions made, and to be made, belong to me", so clearly does not apply to business monies.
Baldur is offline
Report Post
The Following User Says Thank You to Baldur For This Useful Post: Show me >>
# 3
jacu2010
Old 03-11-2010, 12:55 PM
MoneySaving Newbie
 
Join Date: Nov 2010
Posts: 3
Default

Thanks for speedy reply!
See what you mean, but will that apply when
"Being a sole trader means money from the business is in your name and so can be moved into accounts opened by you" (quoted from business savings section of moneysavingexpert.com)
?
jacu2010 is offline
Report Post
# 4
Lokolo
Old 03-11-2010, 1:03 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Apr 2007
Posts: 19,144
Default

I disagree with Baldur (thats a first! ), as a sole trader all money is yours and you are fully liable any debts, so in this case I think you could.

However, you might want to ring up HMRC and ask.
You only live once so make the most of it!
Lokolo is offline
Report Post
The Following User Says Thank You to Lokolo For This Useful Post: Show me >>
# 5
anniecave
Old 03-11-2010, 1:06 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Oct 2004
Posts: 2,076
Default

The money in the business may be in your name, but that doesn't mean it belongs to you. If it belongs to the business, then you need to treat it a such. Sure no-one may stop you making such a transaction, but you can probably do lots of incorrect things in the course of running a business, including theft, tax evasion, and misleading your customers, but that doesn't make any of those things right!

I would wait until near the end of the tax year, then if you do want to take this action, then you can take it out of the business then in the legal way, declare it, pay tax on it, etc, then pay it into the ISA just before the end of the tax year.
Indecision is the key to flexibility.
anniecave is offline
Report Post
The Following User Says Thank You to anniecave For This Useful Post: Show me >>
# 6
baby_fuzz
Old 03-11-2010, 1:09 PM
MoneySaving Stalwart
 
Join Date: Aug 2006
Posts: 679
Default

could the OP not 'pay themselves' out of the business, the value of 5100, then invest it as they choose. If an when it needs to go back into the business, they could bring the money back in as additional funding / seed money.
baby_fuzz is offline
Report Post
# 7
opinions4u
Old 03-11-2010, 1:46 PM
PPR
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Jan 2006
Posts: 19,146
Default

I'm with Lokolo on this.

Yes for a sole trader.
No for a limited company.
opinions4u is offline
Report Post
The Following User Says Thank You to opinions4u For This Useful Post: Show me >>
# 8
jimjames
Old 03-11-2010, 1:49 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Feb 2008
Location: England, UK
Posts: 4,971
Default

Quote:
Originally Posted by anniecave View Post
I would wait until near the end of the tax year, then if you do want to take this action, then you can take it out of the business then in the legal way, declare it, pay tax on it, etc, then pay it into the ISA just before the end of the tax year.
But it isn't being taken out of the business - it is just being moved from one account in the name of Mr J Bloggs to another account in the name of Mr J Bloggs at a different bank.

As long as the business accounts still show the amount as being a business asset then there should be no problem.
Remember the saying: if it looks too good to be true it almost certainly is.
jimjames is offline
Report Post
# 9
jacu2010
Old 03-11-2010, 2:03 PM
MoneySaving Newbie
 
Join Date: Nov 2010
Posts: 3
Default

Good thoughts all.

I followed your advice Lokolo and just phoned HMRC.

They said that to put it into an ISA, I need to take it out of the business (therefore declaring it as income, paying tax on it etc) and then I could invest it in an ISA as it would be effectively 'personal' money. So, even though I'm a sole trader, they would view it as business money and so they don't like that.

I'm not trying to do anything dodgy here - perfectly happy to pay tax on it as and when I take it as income, but I don't want to take it out of the business just yet. Just want somewhere to store it that gets a little more interest until a time when I take it as income/make further business purchases etc.

So if ISAs aren't an option, what other options do I have for leaving the money in the business but getting higher interest on it?
Can I just open any regular savings account (where I pay tax on the interest)?

The other option (as baby_fuzz suggests) is to take the money out of the business as income, invest it as personal money in a savings account or ISA or anything else, leave it untouched, then bring it back into the business as and when required. I was trying to avoid all the transactions/paperwork that involves though, as will then have to declare it, then offset it again if it goes back into the business - not really difficult, just trying to keep things REALLY simple and minimise the amount of to-ing and fro-ing.
jacu2010 is offline
Report Post
The Following User Says Thank You to jacu2010 For This Useful Post: Show me >>
Closed Thread

Bookmarks
 
 




Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

 Forum Jump  

Contact Us - MoneySavingExpert.com - Archive - Privacy Statement - Top

Powered by vBulletin® Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.

All times are GMT +1. The time now is 5:39 AM.

 Forum Jump  

Free MoneySaving Email

Top deals: Week of 23 April 2014

Get all this & more in MoneySavingExpert's weekly email full of guides, vouchers and Deals

GET THIS FREE WEEKLY EMAIL Full of deals, guides & it's spam free

Latest News & Blogs

Martin's Twitter Feed

profile

Cheap Travel Money

Find the best online rate for holiday cash with MSE's TravelMoneyMax.

Find the best online rate for your holiday cash with MoneySavingExpert's TravelMoneyMax.

TuneChecker Top Albums

  • VARIOUS ARTISTSNOW THAT'S WHAT I CALL MUSIC! 87
  • VARIOUS ARTISTSFROZEN (ORIGINAL MOTION PICTURE SOUNDTRACK)
  • VARIOUS ARTISTSEUPHORIC CLUBLAND 2

MSE's Twitter Feed

profile
Always remember anyone can post on the MSE forums, so it can be very different from our opinion.
We use Skimlinks and other affiliated links in some of our boards, for some of our users.