£300,000 in one bank - what do I do?

a7man

I wouldnt worry if its one of the major banks in UK. There is only a v minute chance of them folding, and many will even have enough spare capital to invest in banks that are in trouble at the moment - for example Lloyds.

bartsimpson

JimmyTheWig wrote: »

If you ever plan to use this money then you'll have to pay the tax on it at some point, won't you?
I don't get the benefit of it sitting in a business account. Is it earning good interest?

At the moment, I don't need it in a lump sum, so I'm happy to take £70,000 out each year and pay 20% tax on it. Anything above £70,000 a year and the government rapes me by taking 40% of it,

so this is the benefit of it sitting in a business account.

It's earning 5% at the moment.

LucyTheDwarf

Well, you have to make a choice. Do you want to up your joint salary, and pay 40% on the money above the first £70,000, or risk it in the business? Get a good tax accountant, and work out the best way to get this money out, is how I'd move forward.

JimmyTheWig

bartsimpson wrote: »

At the moment, I don't need it in a lump sum, so I'm happy to take £70,000 out each year and pay 20% tax on it.

I see, so the business isn't making this sort of money any more? I.e. are you saying that the balance on your business account is reducing by £70k a year?

I presume that, given that sort of joint income, you have got personal savings in addition to this money in the business - and that if the worst happened and you lost the money in the business account (due to the bank folding or a problem with the business) that you'd cope.

In which case I'd say do nothing. As you allude to, £120,000 is a lot of money to pay for insurance against something very unlikely.

derbyjon

JimmyTheWig wrote: »

If you ever plan to use this money then you'll have to pay the tax on it at some point, won't you?
I don't get the benefit of it sitting in a business account. Is it earning good interest?

If you wait until the business is closed down, then the remaining funds can be taken as capital distribution instead of dividend. I've done this with my last 2 businesses and paid around 10% tax (capital gains) each time.

bartsimpson

a7man wrote: »

I wouldnt worry if its one of the major banks in UK. There is only a v minute chance of them folding, and many will even have enough spare capital to invest in banks that are in trouble at the moment - for example Lloyds.

Would you still stand by this statement today given the share price drops?

silvercar

I am in exactly the same situation. Money is all with one bank, take out dividends each year, left a large sum of money in the bank to avoid paying too much tax.

Accountant reckons this is the best way to minimise tax. I accept the point about a "limited" company full of cash does not actually limit the liability very much, but that wasn't the reason I trade through a limited company.

In my case the business may well finish in a few years and then I can continue to draw out the money over time and keep the tax bill low.

I know I can't open accounts in my name to transfer the money around (though I did wonder if this would be allowed if I declared that the company was the beneficial owner of the money even if it is in my name?), but I though of opening a second business account. Went into HSBC who told me its illegal for a limited comapny to bank with more than one bank

ebyard

silvercar wrote: »

....Went into HSBC who told me its illegal for a limited comapny to bank with more than one bank

Absolute balls. You can bank with who you damn well like. As long as all the money is accounted for, you can have 50000 bank accounts if you want. Many ltd companies have a business account with one bank, and a high interest account for VAT bills etc with another.

itsnever2lateisit?

silvercar wrote: »

Went into HSBC who told me its illegal for a limited comapny to bank with more than one bank

Thats complete rubbish, I assume that your bank is HSBC, and they just dont want you to go elsewhere.

FYI I am involved with a company that trades in most european countries, it has accounts with
UBS
La Poste (Swiss)
Hypovereinsbank - Germany
DeutscheBank - Germany
PSK - Austria
Credit Mutuel - France
La Poste (French)
Santander - Spain
RBS - UK
Barclays - UK

HTH