How can a limited company invest cash surplus?

[skuml]

We (me and my husband) have a limited company (not a trading company!). We are not working through it at the moment. Company account cash surplus. Currently its getting 0.5% interest!!
My husband is in higher tax bracket hence we cant just take out money as dividends.

I am exploring options - How to invest cash setting company account? I would like to invest in stocks and etfs plus money market funds. Not sure whether this route is tax efficient ? I have asked my account however he is taking time!

Or Is it better to close the company and get Entrepreneurs relief ?

Or We do have plan to buy a buy to let flat - Should we get it through company account? We will save tax on rental income!

Meanwhile I am researching high % interest bussiness accounts!

Would really be helpful if someone has done any of above ? would love to know your experience?

Many thanks!!

I'm in a similar situation - just about to transfer a chunk of retained earnings into a few business savings accounts (all paying 3.5% - 4%) - split to get the £85k protection - Starling, Tide and Cynergy

Thanks for your reply!
Wondering anytime did you invest company's money in money market funds or ETF?

Put £60000 each into pensions for a start. You can also backdate some contributions if you've not made any for the past 3 years,

Many thanks! Yes that's the best tax efficiency!

We do try to maximize investment into pension.
However, we will only be able to access it once we turn 58! 10+ years away!!

Govt keep changing the rules and dont what rules will be in next 10+ years!
Would like to manage our extra money ourselves! And hopefully retire in next 5-7 years!

So is your company a close investment company, if not trading and investing assets. You might have to think about what your reporting obligations are and what the rates of tax are.

Depends on how long you've not been actively trading, but you may no longer be eligible for business asset disposal relief (used to be entreprenneurs relief).

Our accountant suggested pension investment.

Is your company dormant?

Pensions are a good shout as long as you're certain that you can get the corporation tax relief, i.e. timing of payment of pension contribution compared with timing of profits/corporation tax to make sure it either reduces the profits on which CT is due, or if it causes a loss in the year it's made, ensure that the loss can be set against/carried back against periods where there was a profit and CT paid still within the timescales. The devil is in the detail. Sometimes, if the funds have accumulated over many years and recent/current years show small profits or losses, then there's no way to get the full benefit of tax relief on the pension contributions. Never "assume" anything when it comes to tax. If the OP wants to explore this option, they need to run it by their accountant re tax relief and independent financial adviser re choice of scheme/funds etc to ensure it's invested properly in view of their life goals, retirement plans, etc. Easy to end up with a lump sum in a pension scheme that you don't have a plan for. Very similar to letting funds build up within a limited company that you don't have a plan for!

If you're planning to purchase a buy to let anyway, then it makes sense to buy it through the company rather than dissolve the company, pay tax on the monies drawn and then reinvest the money (after tax) in a personally owned buy to let.

Of course, it's still "trapped" within the company, just like the cash is, so you're just kicking it into the long grass, but at least with a limited company, you have options for passing tranches of shares to your dependents over time as part of CGT and IHT planning which aren't quite so easy when a BTL property is personally owned.

At the end of the day a limited company is a kind of long term "tax saving wrapper" as keeping cash or assets within it does kick into the long grass the tax charges on removing cash/assets from it.

I would send some of it to your pensions as Employer's Contribution. You can do this as a one off.
You can also ask your accountant to estimate what your post corp tax profit is likely to be, then take a lump out as a dividend to you or your husband.

You can set up a separate company for BTL your parent company lend the monies needed with interest to be repaid annually.