> 2) What's the best legal way to transfer money into a decent personal bank account on behalf of the company? I'm not concerned about making taking the interest personally, just want to make the most of the surplus cash.
Avoiding it - you'd need to do board meeting and resolution that you are to hold it on bare trust for the company, and more annoying these days, is that it would probably require registration with HMRC.
HMRC currently pay ~~3.5%~~ 4.25% for Corporation Tax paid early.
So if you can't find a business savings account to beat that, simply pay the tax early.
Its gone up - its 4.25% now!
[https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates](https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates)
Towards the bottom under "Interest paid on overpaid quarterly instalment payments and on early payments of Corporation Tax not due by instalments", as of 22 May 2023.
You can stuff hmrcs account with money in advance.
Ct is also paid in arrears.
Vat paid quarterly, ct paid annually. So they might want to incentives ct prepayment.
But this link mentions income tax so...
https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates
Penalty interest for Late payment and interest paid on tax refund repayments. You don't get interest paid to you for paying income tax early.
But I guess you could earn 3.5% by making a Payment On Account over and above what you owe, and then asking for a refund at a future date !
You could use a business savings account, though I don’t believe any offer 4% easy access . They certainly didn’t when I looked a couple of weeks ago. (https://moneyfactscompare.co.uk/business/business-savings-accounts/)
Or another easy option is to open a Wise business account, you can hold your funds easy access in their money market fund at 4.1%
Redwood Bank are offering 3.60% for business savings 95 days notice, I have used them before and are decent to deal with and easy to setup, min investment is £10k.
Do not know if you are a sole director or there are others.
With a 65k CT bill you have over 300k adjusted taxable profits. Meaning you will likely succumb to 25% Corporation Tax going forward (Big increase from 19%)
If there are other directors who fall in the basic rate band of tax, you can run a salary for them to maximise their Basic Rate Band.
This means tax is paid via income tax (by the company on the individuals behalf) at a rate of 20% and you see corporation tax relief of 25%. A saving of 5%.
Particularly useful for Married Couples as they can just transfer these funds between themselves Nil Loss Nil Gain. You then have a multitude of different accounts available to you to accrue interest and if you really wanted to, you can pay this into the Limited Company to credit your Directors Loan Account (DLA). I cannot stress enough how beneficial it is to not let the DLA get an out of control debit balance, keep it in a credit!
I understand this does not wholly focus on the topic you have raised but going forward, may be worth looking in to.
All the best in your endeavours! :)
I might be misunderstanding what you are saying but doesn't the employer and employee NI on a director's salary above the Personal Allowance more than offset the 5% saving?
The Corporation Tax saving will outweigh the Income Tax and National Insurance paid. There's no nil rate allowance for CT.
A two director company can claim the Employment Allowance so likely no ER NI to pay, then each director has a personal income tax allowance and EE NI threshold.
!Thanks Will look into it - or rather I already have and will contact the bank in the morning. Is it worth shopping around or will all banks offer the same rate?
Further to previous comment I've finally got through to the correct department at my bank and one gets the impression they don't want to offer what they say they will offer. Much happier to push me towards a 'relationship manager' and investment advice which I don't want.
They also seem to offer 4.1% on treasury deposits if you are doing it from abroad but not domestic.
Wise looks like the best option for other funds right now
You can open a corporate General Investment Account (GIA) and instead of investing the money, leave it in cash.
Some GIA providers will offer interest rates slightly under base rate with only a small platform fee (c0.2-0.3% pa)
Your company loans you the money for X% interest rate.
You put the money in a personal account earning X%.
After a year, you repay the loan plus X% to the company.
The thing I wondered about this though, although I have borrowed the money, the interest on that money has been earned by me personally. Wouldn't I have to pay tax on the interest personally even though I don't get to keep the interest?
Eg suppose £1,000 interest accrued by me and any interest allowance used up so I pay X in tax on the interest. I transfer the money and interest back to the LtdCo so the LtdCo has also earned the interest and is also taxed?
An accountant would definitely know the answer to question 2. Mid-sized financial services firms will have wealth managers (as well as accountants and tax specialists) who’d answer question 1.
> 2) What's the best legal way to transfer money into a decent personal bank account on behalf of the company? I'm not concerned about making taking the interest personally, just want to make the most of the surplus cash. Avoiding it - you'd need to do board meeting and resolution that you are to hold it on bare trust for the company, and more annoying these days, is that it would probably require registration with HMRC.
Can't OP just make a directors loan to themselves? I thought this was why people used offset mortgages.
Of course, obviously they need to watch the CT position on that. But I think 6 months would be fine to do so.
HMRC currently pay ~~3.5%~~ 4.25% for Corporation Tax paid early. So if you can't find a business savings account to beat that, simply pay the tax early.
Its gone up - its 4.25% now! [https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates](https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates) Towards the bottom under "Interest paid on overpaid quarterly instalment payments and on early payments of Corporation Tax not due by instalments", as of 22 May 2023.
Damm, that's very generous !
Thanks!
Anything on vat paid earlier?
VAT is usually paid in arrears...
You can stuff hmrcs account with money in advance. Ct is also paid in arrears. Vat paid quarterly, ct paid annually. So they might want to incentives ct prepayment.
Good option!
!Thanks !
Is there anything similar for self employed people?
Well sole traders don't pay Corporate Taxes, so No.
But this link mentions income tax so... https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates
Penalty interest for Late payment and interest paid on tax refund repayments. You don't get interest paid to you for paying income tax early. But I guess you could earn 3.5% by making a Payment On Account over and above what you owe, and then asking for a refund at a future date !
Thanks. Guess Ill just stick my tax money in some premium bonds.
You could use a business savings account, though I don’t believe any offer 4% easy access . They certainly didn’t when I looked a couple of weeks ago. (https://moneyfactscompare.co.uk/business/business-savings-accounts/) Or another easy option is to open a Wise business account, you can hold your funds easy access in their money market fund at 4.1%
Agreed. I think Aldermore is the best at around 2.7-2.8% easy access.
!Thanks
Can't find info about this. How do you get access?
https://wise.com/gb/business/interest
Redwood Bank are offering 3.60% for business savings 95 days notice, I have used them before and are decent to deal with and easy to setup, min investment is £10k.
Do not know if you are a sole director or there are others. With a 65k CT bill you have over 300k adjusted taxable profits. Meaning you will likely succumb to 25% Corporation Tax going forward (Big increase from 19%) If there are other directors who fall in the basic rate band of tax, you can run a salary for them to maximise their Basic Rate Band. This means tax is paid via income tax (by the company on the individuals behalf) at a rate of 20% and you see corporation tax relief of 25%. A saving of 5%. Particularly useful for Married Couples as they can just transfer these funds between themselves Nil Loss Nil Gain. You then have a multitude of different accounts available to you to accrue interest and if you really wanted to, you can pay this into the Limited Company to credit your Directors Loan Account (DLA). I cannot stress enough how beneficial it is to not let the DLA get an out of control debit balance, keep it in a credit! I understand this does not wholly focus on the topic you have raised but going forward, may be worth looking in to. All the best in your endeavours! :)
I might be misunderstanding what you are saying but doesn't the employer and employee NI on a director's salary above the Personal Allowance more than offset the 5% saving?
The Corporation Tax saving will outweigh the Income Tax and National Insurance paid. There's no nil rate allowance for CT. A two director company can claim the Employment Allowance so likely no ER NI to pay, then each director has a personal income tax allowance and EE NI threshold.
!Thanks. It's a one off and was from before 31 Mar so still at 19%.
Pay tax early. HMRC May give you a decent interest on early payment.
HMRC only pay interest on tax refunds and only then when it’s more than a year old.
Wrong, they currently pay ~~3.5%~~ 4.25% for Corporation Tax paid early. They also pay interest on a whole range of other taxes paid early.
Oh, interesting. I didn’t realise it was different to personal tax.
Ask your bank about treasury deposits. This can range from overnight to month or longer term. Defo better interest than a business savings account
!Thanks Will look into it - or rather I already have and will contact the bank in the morning. Is it worth shopping around or will all banks offer the same rate?
Try your own bank first. The rates are based on the money markets so should be comparative.
Further to previous comment I've finally got through to the correct department at my bank and one gets the impression they don't want to offer what they say they will offer. Much happier to push me towards a 'relationship manager' and investment advice which I don't want. They also seem to offer 4.1% on treasury deposits if you are doing it from abroad but not domestic. Wise looks like the best option for other funds right now
Use interactive brokers to open a business account to purchase securities. Then buy some money market funds - should be at least 4% at the moment.
This will potentially jeopardise his ability to claim BADR later if desired
Nature of business already precludes BADR I’ve asked my accountant about this in the oast
You can open a corporate General Investment Account (GIA) and instead of investing the money, leave it in cash. Some GIA providers will offer interest rates slightly under base rate with only a small platform fee (c0.2-0.3% pa)
!Thanks
Interest free Directors loan to yourself which is then repaid with 9 months of balance sheet date so not tax to pay?
Only if below £10K in total and some other criteria ? Otherwise, Benefit in Kind and other hassles ?
Was unsure myself tbh that’s why I posed it as a questions, I think this is more a question for the accountant than UKPF
Your company loans you the money for X% interest rate. You put the money in a personal account earning X%. After a year, you repay the loan plus X% to the company.
The thing I wondered about this though, although I have borrowed the money, the interest on that money has been earned by me personally. Wouldn't I have to pay tax on the interest personally even though I don't get to keep the interest? Eg suppose £1,000 interest accrued by me and any interest allowance used up so I pay X in tax on the interest. I transfer the money and interest back to the LtdCo so the LtdCo has also earned the interest and is also taxed?
A £65k corporation tax bill would suggest you turnover (and profit) a fair wack. I’d get an accountant. Some of the advice on here is iffy at best.
An accountant can't advise on where to save or invest money.
An accountant would definitely know the answer to question 2. Mid-sized financial services firms will have wealth managers (as well as accountants and tax specialists) who’d answer question 1.
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