Investing in Fund through limited company

NoviceInvestor1

dunstonh said:

NoviceInvestor1 said:

Is there a reason you want to invest it within the ltd company rather than take it out the ltd company and then invest it? 

The latter means paying tax up front, but providing it goes into an ISA no further tax in future. 

Pension will beat ISA in that scenario.

Limited companies can treat pension contributions as a business expense which reduces the corporation tax bill and avoids income tax, dividend tax and NI.   
For the vast majority of shareholding directors, the pension wrapper is miles ahead of the alternatives.

It would, but the very first post specifically said they don't want to use their pension.....

Whilst your point is generally correct, there are certain situations whereby adding more to a pension isn't the best option even if it's the most tax efficient. 

dunstonh

It would, but the very first post specifically said they don't want to use their pension.....

if they said they wanted to put their head in an oven, would you tell them how to do that?

it does no harm to check that they are aware that the pension is the best option.    Too many people don't understand that pensions are no longer a product with a restrictive maturity process but can be used as a tax wrapper.

Whilst your point is generally correct, there are certain situations whereby adding more to a pension isn't the best option even if it's the most tax efficient. 

There are rarely any scenarios where you can give one-size-fits all solutions.  There are always caveats.
But before you go ISA, you would then look to see about future tax business/tax years and pension contributions are a viable option. 

waveneygnome

Could the OP's approach also be relevant in the following scenario:

i)  has sufficient working capital in the business
ii) has built up a short term-deposit account for company rainy day emergencies
iii) already loaded this years £60k pension contribution
iv) already used carry back allowances
v) ditto for all other Directors (spouses!)

 But still has excess funds in the Ltd company to invest for the long term?

AAZ

waveneygnome said:

Could the OP's approach also be relevant in the following scenario:

i)  has sufficient working capital in the business
ii) has built up a short term-deposit account for company rainy day emergencies
iii) already loaded this years £60k pension contribution
iv) already used carry back allowances
v) ditto for all other Directors (spouses!)

 But still has excess funds in the Ltd company to invest for the long term?

This is a side gig I do apart from normal job and my pension get maxed out (very complicated system and you don't know what has been done , you only realise when HMRC come back for seeking more money for extra contribution !!) so I don't want to touch pension.

I am higher rate tax payer and this money is essentially for retirement but as said can't use pension.

dunstonh

AAZ said:

waveneygnome said:

Could the OP's approach also be relevant in the following scenario:

i)  has sufficient working capital in the business
ii) has built up a short term-deposit account for company rainy day emergencies
iii) already loaded this years £60k pension contribution
iv) already used carry back allowances
v) ditto for all other Directors (spouses!)

 But still has excess funds in the Ltd company to invest for the long term?

This is a side gig I do apart from normal job and my pension get maxed out (very complicated system and you don't know what has been done , you only realise when HMRC come back for seeking more money for extra contribution !!) so I don't want to touch pension.

I am higher rate tax payer and this money is essentially for retirement but as said can't use pension.

The pension allowance has gone up to £60k this year from £40k in previous years.  So, if it was a borderline issue before, it may not be any more with that jump in annual allowance.

Prism

Some people use a directors loan which they then invest as an individual and repay back into the company later

AAZ

Prism said:

Some people use a directors loan which they then invest as an individual and repay back into the company later

Thanks no I don't want to use director loan may be more complicated ... I am seeking to platform for investing, It has been suggested about AJ bell and I will look into it

AAZ

dunstonh said:

AAZ said:

waveneygnome said:

Could the OP's approach also be relevant in the following scenario:

i)  has sufficient working capital in the business
ii) has built up a short term-deposit account for company rainy day emergencies
iii) already loaded this years £60k pension contribution
iv) already used carry back allowances
v) ditto for all other Directors (spouses!)

 But still has excess funds in the Ltd company to invest for the long term?

This is a side gig I do apart from normal job and my pension get maxed out (very complicated system and you don't know what has been done , you only realise when HMRC come back for seeking more money for extra contribution !!) so I don't want to touch pension.

I am higher rate tax payer and this money is essentially for retirement but as said can't use pension.

The pension allowance has gone up to £60k this year from £40k in previous years.  So, if it was a borderline issue before, it may not be any more with that jump in annual allowance.

I will look into it , yes it was a borderline issue

Futuristic

Have you talked to your accountant? If it's a trading company you investing directly from it can affect your company status and future relief when you wind it down/sell. 

Also see https://www.foxymonkey.com/how-to-invest-your-company-profits/

You can use Interactive Investor, Interactive Brokers or InvestEngine.  The first 2 are very big established firms, IE is new. 

waveneygnome

AAZ - I have done this with Fidelity. 

At the time, I couldn't find too many platforms that would allow 'corporate' accounts.  HL used to do this, but had stopped (think that's still the case).  Fidelity have been good, great customer service whenever I've called;  but with one big drawback.....no online visibility.  Its effectively a postal/telephone only access account.  This may be a good thing......invest and leave well alone/forget about/not temptation to tinker.  However I know others my find the lack of visibility frustrating.

My accountant was fine/happy I didn't breach any trading rules/possibility of HMRC reclassifying the company, but worth checking with your accountant first.

I funded mine with a cheque (remember those?), and set up a direct debit each month.  The only thing I tinker with is the DD, increasing/decreasing as normal business allows.  I don't check the funds (basic index trackers, really low fees), get quarterly postal statements.  I'm really surprised at how over a relatively small number of years it has grown.