Limited company

I have a ltd company and I’m the only director and employee.

What are the best ways to get money out of my business account and into savings and investments, the most tax efficient way.

Comments

  • Savvy_Sue
    Savvy_Sue Posts: 45,936
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    I know you won't be able to do this until Monday, but the best place to address this question is your company accountant, who will know you and your business better than we do, and can ask you all the relevant questions about you and your company's situation.
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  • adamjw3
    adamjw3 Posts: 39
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    Will do that but also would like advise from here

    What do you need to know about the business?

    I’m a software developer, work contracts. No other employees.
  • Pennywise
    Pennywise Posts: 13,468
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    Does ir35 apply? What amount do you need to draw out? What profits does the company make? What other taxable income do you have in the current tax year? What pension arrangements do you already have? How long until retirement? How long do you intend to contract through the company? Is any of the work for foreign clients or done overseas?
  • 00ec25
    00ec25 Posts: 9,123
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    adamjw3 wrote: »
    Will do that but also would like advise from here

    What do you need to know about the business?

    I’m a software developer, work contracts. No other employees.
    my adviCe would be a move to an accountant who explains such things to you at the outset so you don't have to ask the internet.
    As pennywise shows, giving adviCe is more involved than just saying salary and dividends.
  • bris
    bris Posts: 10,548
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    It's not as simple as just taking money out and putting it elsewhere.


    You can take a salary with PAYE or take dividends, dividends are profit after all tax etc is paid at the end of the financial year. You still need to file a personal return if you take the dividends route.


    You need an accountant, not just for advice but to file returns to HMRC and companies house. Ltd companies are a tricky business for a novice to navigate through.
  • nmn
    nmn Posts: 21 Forumite
    edited 26 May 2019 at 12:52PM
    As others state, you could:
    - take enough dividends to take you to HR threshold

    - pay into a pension (up to £40k/year TOTAL). Your bet here is that pensions don't end up being taxed differently by the time you draw


    - an option is to take a higher salary/divi and personally invest in VCTs or EIS schemes which offer very generous tax relief (crucially in the year you invest) - at the cost of risk - typically this can represent an excellent way to pay very little tax despite having a large salary, and there is only a 5 year limit before you can cash out unlike a pension. VCTs typically pay (tax-free) dividends too. Your bet here is that the investments don't decrease too much in value over the five years.

    - leave profit in the company with a view to utilising Entrepreneurs' Relief when the company finally shuts down - a special tax rate of just 10% which represents great "value". Your bet here is that this relief still exists at the time you close the co. down.


    A mix of the above probably makes sense, it all depends on when you think you'll need access to the money and how much tax/risk you're willing to pay.



    Don't forget you can of course also invest through a company; but investment company should probably be separate - potentially can be funded through a loan from the PSC but this option would be harder to do without hiring an accountant or other specialist since other factors likely will come into play.


    Whether or not you need an accountant to help you is another story. Some people find filing returns at CH & HMRC harder than others, it depends a lot on your skill set and to a large extent how much time you are willing to invest.
  • Savvy_Sue
    Savvy_Sue Posts: 45,936
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    adamjw3 wrote: »
    Will do that but also would like advise from here

    What do you need to know about the business?

    I’m a software developer, work contracts. No other employees.
    As you can see, there's a range of questions which might be asked. I'm not an accountant (and even if I were, my advice here would be useless).



    If you've got time on your hands, then google any of the terms you don't understand, and make sure you are looking at sites relating to the UK. Bear in mind that the .gov.uk site will often simplify matters, but can be a good starting point.
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