Setting up a company for PA

caldi9

Hey, am based in the UK and want to set up a company for my personal investing (stocks). I maxed out all the tax-free allowances a la SIPP etc. there are in the UK. Has anyone ever set up a cheap structure in continental Europe or UK where one can invest into stocks and save taxes?

Thank you

Dox

What does the PA in your title stand for?

System

You won't save taxes!

Malthusian

caldi9 wrote: »

Hey, am based in the UK and want to set up a company for my personal investing (stocks). I maxed out all the tax-free allowances a la SIPP etc. there are in the UK.

Any investment profits you make in a UK company are taxed at 19% corporation tax and then taxed again when you take the money out of the company. This is significantly higher than the tax you would pay in your own name.

If you had enough money to make setting up a company in e.g. Luxembourg and investing via that viable, you wouldn't be asking on the Internet, your family office advisers would be doing it for you.

caldi9

personal account

caldi9

Family office advisors or in other words Private Banking takes at least 100bsp of your net worth which is a waste of money.

caldi9

Why is that?

grey_gym_sock

after SIPP and ISA, the next step is to invest in a taxable account.

you have £2,000 annual dividend allowance and £11,700 capital gains tax allowance. are you using them? until you are, there's no tax to pay.

you'll note the CGT allowance is much bigger than the dividend allowance. so what about holding low-yielding equities in a taxable account? now, you shouldn't let the tax tail wag the investment dog too much, but if you were going to hold some higher-yielding and some lower-yielding equities anyway, why not put the higher-yielding ones inside your ISAs and the lower-yielding ones outside?

after investing in a taxable account for a while, you'll (hopefully) have some capital gains. but they're not taxed until they're realized! so try to realize gains up to just under the CGT allowance each tax year (because the annual allowance is "use it or lose it").

if you eventually have too many gains to realize them all, then you may want to postpone taking some of your gains indefinitely (which also postpones the tax on the gains indefinitely). so it would help to have some holdings in a taxable account which you could imagine holding "forever".

ask again when you're doing all the above and running out of ways to avoid paying a lot of tax on dividends and gains.

caldi9

Yes, that is maxed out as well. I pick stocks, so may sell before having held them for 1 full calendar year. Any other suggestions?

grey_gym_sock

you mean the dividend and CGT allowances are maxed out?

then just buy low-yielding equities, like a US tracker or japan tracker, in a taxable account, and hold them indefinitely. some tax on dividends, but not much because low yield. no CGT if you don't sell.

jimjames

caldi9 wrote: »

Family office advisors or in other words Private Banking takes at least 100bsp of your net worth which is a waste of money.

So lose 19% tax instead? That doesn't make sense...