Contractor Cash Help

Jimbles

Hi There,

I'm looking for some advice around how to best invest some money I've made over the last 18 month contracting.

I've come from a poor background and worked hard all my life to get to the stage where I am now where I have my own house (though we are in the process of upsizing) and no debts.

18 months ago I was offered the chance to contract at a new company with a former boss. The day rate is very good and I've been very sensible, paying myself minimum salary and taking as few dividends as necessary.

Its looking like I'll soon be offered a permanent position and should have around £100k in my company bank account after Corporation Tax and VAT.

I would like to invest this money for my future and have considered multiple options from simply putting it all into a pension to buying a second property to rent out. But the truth is, I don't know what to do. Do I leave the money in the company and invest from there? Do I take it out and invest personally after personal tax deductions?

I truly have no idea. All I know is I want to do something sensible with it for my future.

Has anyone here been in a similar position and would be able to offer advice?

Thanks in advance!

Jim

nrsql

Pension - might need to consider the lifetime cap in relation to your employment pension but you can contribute £40k a year and include previous years if you haven't used them. If you are fairly young it means tying up the money for a long time so might be risky.

Not sure whether entrepreneurs relief is still running but if so it might be worth closing the company - assuming you are really going to be employed - that sort of thing often falls through though.

I suspect it's won't be tax efficient to carry on taking money out of the company while you're employed so you might be a bit stuck. Investing via the company might turn it into an investment vehicle which you might want to avoid.

Prism

If you want some return from your cash in the business then there are some fixed terms accounts paying between 1.5% and 2% around or you could consider P2P loans

Pension is my preferred option for money you don't yet need

MallyGirl

pension - it could save you in corporation tax. Talk to your accountant.

Gracie84

I'd definitely recommend a Pension here - check it out with your accountant as there couldbe good tax benefits

cloud_dog

Jimbles wrote: »

Its looking like I'll soon be offered a permanent position and should have around £100k in my company bank account after Corporation Tax and VAT.

I would second seriously looking at pension contributions.

Are you a limited company, and are you a director? If so, then company payments in to your pension would not be restricted by the £40k annual allowance (as far as I am aware).

Prism

cloud_dog wrote: »

I would second seriously looking at pension contributions.

Are you a limited company, and are you a director? If so, then company payments in to your pension would not be restricted by the £40k annual allowance (as far as I am aware).

Its still a 40k limit but is not resticted by salary, since most directors pay themselves very little

cloud_dog

Prism wrote: »

Its still a 40k limit but is not resticted by salary, since most directors pay themselves very little

Obviously, I wasn't sufficiently aware