Best savings scheme for a business?

planteria

perhaps, but i can understand why borrowing money for free & earning a return on it appeals to those with the discipline to handle it

Borrowedtune

ozzage wrote: »

Some folks would be better served keeping their company money properly separate from their personal, technical legality aside.

I second Aldermore. I use them for exactly this purpose and they are very good. But then I haven't had this email yet...

The email says:


Dear

Change of interest rate on your Easy Access Business Savings Account

We are writing to let you know about changes to your Easy Access Business Savings Account. From 1 July 2014, we will be revising the current rate of interest on your account and are therefore giving you at least 30 days advance notice of the change.

With effect from 1 July 2014, the rate on your Easy Access Account will change to 1.10% gross/AER* for balances above £1,000**.

jimjames

planteria wrote: »

perhaps, but i can understand why borrowing money for free & earning a return on it appeals to those with the discipline to handle it

Same here. Get 0% in company account or up to 5% in personal, well worth it - IF you are disciplined as you say.

planteria

& the returns are 'yours' too jim:D

BarleyGB

I keep enough in my business bank account for monthlyoutgoings (VAT, Accountant, PAYE, NI etc), a nominal amount (enough to coverCorporation tax and approx. £10k buffer) is in an Aldermore instant saver. The rest I withdraw.

I hit the higher rate tax limit most years but I see no value in leaving themoney in the company for an undefined term. The tax hit is a one off and I like to think I cover this in a couple ofyears by making the money work for me instead of languishing in a account payingnext to no interest. Maybe ive beenlucky in the last 2 years but ive seen a 30% growth in equities and am now lookingto invest money from this year in a BTL.

In my mind you pay the tax once, leaving it in a company account means you loseopportunities to invest the money year after year.

ozzage

BarleyGB wrote: »

I keep enough in my business bank account for monthlyoutgoings (VAT, Accountant, PAYE, NI etc), a nominal amount (enough to coverCorporation tax and approx. £10k buffer) is in an Aldermore instant saver. The rest I withdraw.

I hit the higher rate tax limit most years but I see no value in leaving themoney in the company for an undefined term. The tax hit is a one off and I like to think I cover this in a couple ofyears by making the money work for me instead of languishing in a account payingnext to no interest. Maybe ive beenlucky in the last 2 years but ive seen a 30% growth in equities and am now lookingto invest money from this year in a BTL.

In my mind you pay the tax once, leaving it in a company account means you loseopportunities to invest the money year after year.

That's a somewhat different point, related to whether you want to leave it in there AT ALL and definitely worth asking.

Personally I only want to take salary/dividends up to the HRT band then stuff as much as possible into into my pension as employer's contribution. Not only is there no income tax hit, it saves me corporation tax.

I agree with you, not much point having it sitting in a business account where I can't even invest it.

planteria

you can only take as much in pension as your salary....is that right ozzage?

ozzage

The only limit on employer contributions is the annual limit (was £50K now £40K, but you can use up to 3 years unused allowance so there's a fair bit to play with if you're just starting).

The salary-based limit applies only to employee contributions.

soulsaver

beancurd wrote: »

A common misconception. You can contribute what you earn, but your earnings include your pension. Limit for employee contributed SIPP this year is £40k. A typical tax-minimising strategy is to pay a salary up the NI limit (about 10k this year) and dividends up to the higher tax limit (about 28k net) then SIPP of 40k. It's the remainder after expenses and corp tax that goes into savings.

Apologies for staying off topic, but:

My understanding is the max you can contribute to your pension & get tax relief on is your total 'earned income' (with a cap £50k? this tax year, but not relevant to my question):

So I follow the £10k salary = £10k to pension & claim relief.
But are you saying that 'dividend income' is also classed as 'earned income'?

planteria

good stuff from all 3 of you...

the advice i was given was along the lines of: £10k salary + £20k dividend + £10k employer pension contribution.

but from you have written, beancurd and ozzage, the EPC could be increased if the company has funds available.