Where for company to save / invest money?

[MrPickles73]

I have my own limited company. I have some company savings, business savings rates have dropped through the floor boards. Has anyone invested their company profits via a platform such as Hargreaves Lansdown?
I invest my own savings via an ISA but wonder if I can do this for my company in a separate investment account?
Any experience or knowledge on this please? Thank you.

You need to be a bit careful with this. Yes you can invest the money, but depending on how much and for how long, you can cause issues with your business classification. Investment companies have different tax rules. Make sure your accountant is happy with the amounts involved. If the cash is for use within the business it’s one thing, but by keeping cash in a business long term you are effectively delaying paying dividends and associated taxes. You are also risking rule changes (that is always the case though).

Why not make a pension payment instead? No tax due, but it’s in your name.

Oh and I should add when I’ve done this the minimum investment was £50k, but HL might have different limits. It will need declaring as a company investment though as it’s an asset of the business.

Thank you for your help Weirdlynormal. I do also make payments to a pension. Over the last 5 years I've stored up quite a decent if small stash in my business savings accounts but the interest rates of these are now falling to 0.5% and were in any case below the rate of inflation so I'm trying to think what else I could do with the profits.
At some stage I'd like to stop working and continue to pay myself some kind of salary / dividends to avoid being a high rate taxpayer so I thought investing the money in equities would a) hopefully outstrip inflation and b) keep it somewhere that I can pay myself later? The income from the investment wouldn't exceed the annual company turnover (unless I get absolutely no work in a year - I'm a consultant).
Any further advice you can give would be appreciated.

Are you doing your £40k a year? Effectively what your describing is exactly what you do with a pension. It’s delayed salary. You just take what you want except it won’t be paying CGT, Inc tax, corp etc. If you haven’t made £40k pension payments you also have catch up ‘carry forward’.
If you’ve filled that up, then that’s different. How old are you?
I can understand reluctance on a pension if you’re relatively young, but if your mid 40’s up, I’d get more familiar with flexible pensions.

Yes I'm paying 40k per year into a pension but I won't be able to touch that until I'm 57? I'm in my 40s.

There are really two different decisions to be made. One is how to invest the money. The other is how to «wrap» the investment. The decisions are interrelated but separate.

The investment decision depends a lot on time horizon and risk tolerance. For money you’re likely to need within 1-2 years, sadly the best option is probably to take the low interest rate in order to avoid buying an investment, losing money and then having to sell at a loss. For money you can keep socked away for 5+ years, keeping it in cash becomes a bigger risk due to inflation, and the opportunity for gains by investing becomes larger, so stocks and shares become a more relevant option. For time periods in between (money likely to be needed within 2-5 years) it is tricky: in normal times a medium term bond could be a good idea but right now by the time you’ve paid fees, you won’t end up ahead of cash unless you buy lower quality credit which means you might not get all of the principal back.

For how to «wrap» the investment there are numerous options, including from paying yourself the money and putting it into an ISA, making it a pension contribution, or perhaps keeping it within the company. Here I am no expert on what is allowed, especially re: keeping it in the company, and it may be worth getting some expert advice if you can find someone unbiased. The one opinion I would express is that I’d be nervous of maxing out pension contributions because although the upfront tax deduction is juicy, government keeps changing the rules and once money is in there, there are strict limits on getting the money out, so you could not do anything to avoid an unfavourable rule change, even if it’s bad to the point of being unfair. Meanwhile, Stocks-and-shares ISAs might be underrated, especially with talk of raising capital gains tax rates: you have to fund these with taxed money, but any gains are tax-free after that. I suppose they could also retroactively change the rules around ISA balances but there is no talk of doing that at the moment.

Well in simple terms, yes invest within the company, but be clear. No tax wrapper so you need to churn to use your CGT allowance (half for a company - but DOUBLE CHECK THAT). It will also mean co. tax returns after you stop trading - more expense, I’d do the maths. If you have any higher rate tax left, and you’ve not filled your ISA’s (spouse?), I’d think carefully about taking it and just paying a one off tax bill.
All of which is not a complete conversation that’s have with a client - I think there’s more to consider (IR35, total earnings, alternative benefits, actual age, other assets, spouse position, importantly - how much is building up each year)