What to do with accumulation of Funds set aside for Tax

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njb73

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Apr 12, 2012
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  • #1
    Hi all,

    I have just started up and am finding it increasingly difficult to get a straight forward answer from my accountant.

    Looking through to the end of the 2012/13 tax year where i will be setting aside my corporation tax throughout, as this will not be payable until 2014, and will be a hefty sum by then, can i do anything with it other than leaving it in my account, for instance,

    Can i put the money into premium bonds and keep adding to it , then pull it out when the tax bill comes in...If so, will it have to be in the company's name or can i put it in my own name...

    Or is there any other routes i can take to maybe make the most out of it...
    Any information would be very much appreciated...

    Thankyou
     
    elaine@cheapaccounting

    elaine@cheapaccounting

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  • #3
    Premium bonds cannot be held in the name of the company (unless this has changed from the last time I looked).

    The funds should be kept in some sort of account in the name of the company.
     
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    MyAccountantOnline

    MyAccountantOnline

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  • #4
    njb73 said:
    Hi all,

    I have just started up and am finding it increasingly difficult to get a straight forward answer from my accountant.

    Looking through to the end of the 2012/13 tax year where i will be setting aside my corporation tax throughout, as this will not be payable until 2014, and will be a hefty sum by then, can i do anything with it other than leaving it in my account, for instance,

    Can i put the money into premium bonds and keep adding to it , then pull it out when the tax bill comes in...If so, will it have to be in the company's name or can i put it in my own name...

    Or is there any other routes i can take to maybe make the most out of it...
    Any information would be very much appreciated...

    Thankyou
    Click to expand...

    You can put the money where you want if it's in the company name.

    The problem arises if you take the funds and invest them somewhere in your own name. If you do that the company has given you a loan, and that has potential tax implications depending on the amount involved.
     
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    elaine@cheapaccounting

    elaine@cheapaccounting

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    Nov 4, 2005
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  • #9
    Spapro said:
    Great question this, any suggestions on accounts paying decent interest which can be opened in a limited company name ?
    Click to expand...


    In my experience all accounts have pretty bad interest rates at the mo - a balance of low finance interest means low investment interest

    Be interested to hear of any paying a reason rate
     
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    Tom McClelland

    Tom McClelland

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    Feb 10, 2008
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  • #10
    Spapro said:
    Great question this, any suggestions on accounts paying decent interest which can be opened in a limited company name ?
    Click to expand...
    You'll only get decent interest AFAICS if you are prepared to do postal banking and term deposits.

    Secure Trust had a 120 day account paying 3.1% (I think from memory) but it is now closed to new depositors.

    The best one that I can find at the moment appears to be Shawbrook offering 2.9% on a 100 day account.

    DYOR, make sure you only deposit with FSA regulated banks, etc.
     
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    S

    Spapro

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  • #13
    Tom McClelland said:
    Better than 0.1%

    And relevantly, it is £3k/year per £100k deposited.

    Better in my pocket than the bank's...:cool:
    Click to expand...

    Absolutely Tom, are there any high street banks etc offering anything then for ltd companies ? paying somewhere between the worst (0.1%) and best (2.9%)

    The banks make me sick, mine pay next to nothing on our significant balance in our seperate 'savings' account and then want to charge us £32 per year for adding an additional commercial card holder and god knows what if we ever slipped into overdraft in our 'current' account ! I need to sit down, take deep breaths and have a cup of tea to lower my blood pressure :mad:

    Does anyone know of anywhere more accessible you can squirrel your money away as a small ltd company and get 1% - 2% interest ? Happy to not touch it for 6-12 months.
     
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    SBlundell

    SBlundell

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    Aug 10, 2011
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  • #15
    njb73 said:
    Looking through to the end of the 2012/13 tax year where i will be setting aside my corporation tax throughout, as this will not be payable until 2014
    Click to expand...

    Just to clarify, I assume your (first) accounting period end is 31/03/2013? IE that you're planning for corporation tax due 01/01/2014? I only ask as you refer to the 2012/13 tax year which is personal tax years & different (though you may of course be working to the same period end 'by coincidence' if you like)

    njb73 said:
    If so, will it have to be in the company's name or can i put it in my own name...
    Click to expand...

    You could put it through your own name if you particularly wanted, but as pointed out there would almost certainly be tax implications. Much better kept in the company's name.

    Stupid question - you've presumably approached your existing bank manager to see what they're offering?
     
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    Y

    yourcreditmanager

  • #16
    As an alternative to accruing interest in a bank account on the pending corporation tax payment, what about paying the corporation tax a bit earlier, I understand HRMC give an interest payment themselves to companies who do this. I've tried calling them to get the lowdown on how this is calculated and the rates involved but like many dealings with HMRC, I ended the conversation feeling slightly confused... and none the wiser...:)

    Has anyone done this... what's the score, is it worth while or do you just get a pittance for being good boys and girls and paying your company's tax bill that little bit earlier... :eek:

    Michael
     
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