Earnings Interest via Limited Company

flat_white_flat_white_ Forumite
15 Posts
Second Anniversary First Post
Forumite
Hi all, just a silly question here to check if i am entirely out of the wack on this.

Given interest rates have risen, interest income has become more substantial, i thought it would be a good idea to incorporate in a limited company and save money via the company account. the structure will be to set up a LTD with say minimal equity, I loan money to the company who will then put into company savings account to earn interest, and then distribute the interest at a more tax efficient way.

There may also be benefits that come with it, i.e. EV company car credit etc.

Is this entirely legit? or would there be a concern for the company's intention to incorporate? fully aware of the cost that may come with (accountants etc etc). 


Replies

  • Jeremy535897Jeremy535897 Forumite
    9.8K Posts
    1,000 Posts Second Anniversary Name Dropper
    Forumite
    If you form a limited company that just holds money, it probably won't be able to claim any sort of expenses or capital allowances, because it doesn't trade, and it is not really an investment company. It will pay corporation tax on the interest, and you will pay dividend tax when taking any money out beyond the repayment of the loan. I doubt it makes sense, but you should take proper advice if the amounts are substantial.
  • eskbankereskbanker Forumite
    25.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Forumite
    the structure will be to set up a LTD with say minimal equity, I loan money to the company who will then put into company savings account to earn interest, and then distribute the interest at a more tax efficient way.
    What specific more tax efficient way(s) do you have in mind?  The proposition sounds very convoluted - are you sure you've made full use of all the more conventional methods of personal tax planning, in terms of pensions, ISAs, etc?
Sign In or Register to comment.
Latest MSE News and Guides

Martin and MSE campaign win

April's 20% energy price guarantee hike postponed

MSE News

Childcare budget boost

More support for children from nine months and those on Universal Credit

MSE News

Energy Price Guarantee calculator

How much you'll likely pay from April

MSE Tools