Investing Ltd Co. profits

MissUncertain

I have Ltd Co. I wish to keep open for future contracting use (I'm currently employed via an FTC so on PAYE but expect to be back in the contractor market within 2 years hence not winding the company up), however it has significant profits after all tax liabilities that I wish to grow.

Property is too time-consuming and I have used my full pension allowance (SIPP) including carry back for the years allowed. I also already use my personal ISA allowance annually. 

I have advice from both my Accountant and a Financial Advisor that I can open a new Ltd Co. and issue an Alphabet share to that from my trading co, allowing the issue of dividends from the contracting company to the investment company in order to place them into an investment bond. I am advised corporation tax has to be paid only when the bond is encashed or assigned to me as an individual.

I am having real trouble getting a bank account for this new Ltd Co, not sure why - maybe because it will have no regular income and so not worth their while, but it has attracted all sorts of questions e.g. Are you a registered FCA? Will you be holding client monies? None of these are relevant as no other parties involved, I am sole director of both Ltd Cos.

My accountant recommends this new Ltd Co. specific for the investment (as opposed to using my trading company) in order to keep it clear and distinct from trading, payroll, VAT, etc.

My questions are:
1) Has anyone got experience of this and which bank did you use?
2) Can the experienced flag any concerns between the accountant's and the financial advisor's advice? E.g. others have pointed out I need to understand when B.A.D.R. applies - i.e. would bond encashment or assignment occur before B.A.D.R. becomes relevant, or is this another tax burden I need to factor in?
3) Is the simpler, less uncertain alternative a 5-year fix via an individual savings account (best = currently 5%), having taken out the cash and taken the tax hit on dividends? 

It seems challenging to understand the mechanics clearly now, so I am worried in ten years it will be even harder and I am concerned about any gap between each professional's advice. 

Micky_Stockwell

Ask your accountant about the changing Corporation Tax rules next year. I'm not sure what your profits are but <£50k pa will be at 19%. Over £250k will be 25%. However in between the marginal rate over £50k will be 26.5% to taper up.

The different Corporation Tax rates bring back some rules that went out earlier in the 2010s. If you have two businesses (assuming you are sole shareholder), the £50k threshold will be divided equally between each. It's not £50k in total. So if your contracting business makes £30k profit, CT = £25k x 19% + £5k x 26.5%. Unless one business is officially dormant, just having two companies might cost you more Corporation Tax on the one that really pays the bills.

I only save my money as cash. Bonds or look at the United Trust Bank which has a tracker notice account. I will be closing my second business because of what I've described above - it is too small a side line to take the hit on my trading business.