Using Personal Deposit accounts for surplus limited biz funds

[Mountaintiger]

Ive a limited business which has surplus funds. Am I ok to place them into Personal deposit accounts where I might get better 'savings' rates? Its not my intention to use the funds personally, I just want to get the best rates thats all.

 

[MyAccountantOnline]

Ive a limited business which has surplus funds. Am I ok to place them into Personal deposit accounts where I might get better 'savings' rates? Its not my intention to use the funds personally, I just want to get the best rates thats all.

You can but bear in mind the rules relating to directors loans.

How much are you looking to transfer out of the company into a personal account?

 

[STDFR33]

To avoid DLA issues, you will need to either:-
(1) Write to HMRC and ask them to agree that the sum is held in trust.
(2) Get a solicitor to knock up a trust deed.

I'd prefer option 2, but the costs may be prohibitive.

 

[Mountaintiger]

There is a surplus of approx £100k. Note the intention isnt to use the money for personal use, it will still be in the limited company pot so to speak. If it had to be used at some point it would be fed back into the business current bank account and not paid to me personally.

 

[MyAccountantOnline]

There is a surplus of approx £100k. Note the intention isnt to use the money for personal use, it will still be in the limited company pot so to speak. If it had to be used at some point it would be fed back into the business current bank account and not paid to me personally.

Unless you take the options suggested above it'll create a directors loan.

Have a read here it explains the tax consequences.

 

[Mountaintiger]

I think my confusion with this is that I dont understand its perceived as being taken out to use personally, as opposed to the money taken out but remaining on the ltd companys balance sheet as a current asset as cash. The accounts system would show it being transferred from the business bank account, to another (in personal name however).

 

[STDFR33]

You and the company are two separate legal entities. If you take cash out of the company, then it is a loan to yourself.

The only way to avoid it being deemed a loan is for you to hold it trust for the company. For it to be held in trust, you must do one of the options above.

If you do not hold it in trust, with the necessary documentation in place, it is a loan and the accounting and tax treatment will follow.

 

[UK Contractor Accountant]

Have you had a look at Funding Circle for company investments - averaging 6.6% return before tax.

https://www.fundingcircle.com/uk/statistics/

 

[prosperitymortgage]

If you're with a limited company, then moving excess money(funds) from business to personal is really not a big problem. But keep in mind that you will still have to pay tax on all the income though.

 

[Ian J]

Have you had a look at Funding Circle for company investments - averaging 6.6% return before tax.

The saying that investments can go down as well as up was never more appropriate than with peer to peer lending as a large number of borrowers have gone bust leaving the investors with zilch.

A small factoring company went bust in September and the peer to peer investors who loaned the company £2m won't see a penny back

 

[MyAccountantOnline]

If you're with a limited company, then moving excess money(funds) from business to personal is really not a big problem. But keep in mind that you will still have to pay tax on all the income though.

Providing you dont mind paying tax and NI on a directors loan and the tax charge for the company of 32.5% unless a trust deed has been created.

 

[Dawn Lane]

Does your bank not have a company savings account you could transfer them to? HSBC does - I use it to hold my Tax/VAT funds separately and they attract interest on them in that account.

 

[UK Contractor Accountant]

The saying that investments can go down as well as up was never more appropriate than with peer to peer lending as a large number of borrowers have gone bust leaving the investors with zilch.

the rate quoted is after bad debts. As always spread the risk over a number of investments.