Is this investment worth it?

jazzy23

I recently wanted to take my max dividends from my small company, pay the tax (at 8.75%) and invest in stocks and shares Isas.  Accountant says why bother, you pay all that tax? However, if I do nothing money sits in business account not doing much.  What do people think?
I appreciate stocks and shares are not a given...!!!

tacpot12

What does your small company do? 

Did you ask your accountant what they recommended your company should invest the money in?

You could ask your accountant to show you the effect on the amount of money you personally have available to spend if you invest through your company, or withdraw the money, pay Corporation Tax, and invest it personally in an ISA. If you assume the same investment return for each option, you can see the effect of each choice. 

jazzy23

oh he wouldnt stretch to that am sure - I am just a small training company.  I will have a look and see what I can do- thanks

NorthernJoe

Open a general investment account for the LTD company? 

jazzy23

thanks, thats useful to know. 

jazzy23

I have spare cash in my small business and my accountant has always said, leave it there so you dont pay the 8.75 dividend tax - however, I think I should be taking it an investing it in S&S Isas - as surely compound interest over time is better than leaving it in a business account which pays little interest?
and on that note, anyone got any good business savings accounts they can recommend?
I have, before anyone suggests it, started to put money straight into a pension.

thanks

dunstonh

I have spare cash in my small business and my accountant has always said, leave it there so you dont pay the 8.75 dividend tax - however, I think I should be taking it an investing it in S&S Isas - as surely compound interest over time is better than leaving it in a business account which pays little interest?

If you put it in an S&S ISA, you have to draw it from the company and pay dividend tax.

I have, before anyone suggests it, started to put money straight into a pension.

Pension beats ISA in this scenario provided you don't need the money before age 57/58.     That is why they get mentioned.

EthicsGradient

jazzy23 said:

I have spare cash in my small business and my accountant has always said, leave it there so you dont pay the 8.75 dividend tax - however, I think I should be taking it an investing it in S&S Isas - as surely compound interest over time is better than leaving it in a business account which pays little interest?
and on that note, anyone got any good business savings accounts they can recommend?
I have, before anyone suggests it, started to put money straight into a pension.

thanks

Perhaps this depends on whether your business will need more cash in the future. If it might, then leaving the cash in the business might be better than withdrawing it as a dividend, paying some tax, and then having to put some back in again. If the cash needs will always be meetable with the business revenue (or by cutting the dividend you take out in the future, which would also have attracted the dividend tax), then it may be better to take it out now and see it grow faster, in an ISA.

Is this a business you will eventually sell or pass on to someone else (in which case the value of cash held in the business at the time, and how the sale is taxed, may be a factor)? Or is it a business that will be completely wound up and all cash removed (as a dividend?) when you retire? That might influence why your accountant says what they do.

jazzy23

completely wound up - only me,no dependents - thanks for the ideas
regards

penners324

Your company could pay into your pension?

Or open an account with like of Flagstone to get business savings accounts 

jazzy23

Allica  have good rates I found too