Buy stocks with my ltd

[cwah]

Hello

I have some left over cash in my company and I'd like to use it to buy stock for 2 reasons:
- dividend paid to company are not taxed
- it's better than having cash laying around

Do you know where I can do that? I wanted to open it on ii.co.uk but they asked for my Legal Entity Identifier. This is a number for financial institutions which I'm not (just a simple 1 man contractor)

Any idea what to do?

Thank you

[northernladuk]

So apply for an LEI then.

[Lance]

I think you’ve missed the best reason to use a LTD as an investment vehicle. You can offset losses against your CT liability.
Without that you’d be better off taking the money out and investing it personally.
With that you’d still be better off taking it out and investing it personally.
That’s just my opinion though.

Next I’lol challenge your original assumptions.
1 - The LTD doesn’t pay tax on the dividend it receives. It does pay tax on profit though.
2 - depends on the liquidity requirements. After you’ve covered CT and VAT liabilities, got a decent war chest, maxed out the dividends to higher rate threshold and your pension, then you’ve got cash left to invest. At that stage it might be worthwhile investing and risking it all, but as you still need to get it out at some point you need a longer term plan.

[cwah]

Thanks for the advice. I'm going to apply for the code then.

Just a couple of point:
- I don't invest anything in my pension because I can't be bothered to wait for 20 years until I can get a penny out of it. I know pension is important, but I may have cash requirement at some stage and don't want to be locked. I'd probably start investing in my pension in 10 years time.
- I didn't get the difference between not being taxed for dividend and being taxed for profit? If I receive £1k in dividend, I won't pay dividend tax. So no tax although I earned money out of it?

[Lance]

Thanks for the advice. I'm going to apply for the code then.

Just a couple of point:
- I don't invest anything in my pension because I can't be bothered to wait for 20 years until I can get a penny out of it. I know pension is important, but I may have cash requirement at some stage and don't want to be locked. I'd probably start investing in my pension in 10 years time.
- I didn't get the difference between not being taxed for dividend and being taxed for profit? If I receive £1k in dividend, I won't pay dividend tax. So no tax although I earned money out of it?

On pensions - learn about compound interest. It's the most powerful force in the universe. Einstein's Theory of Compound Interest - Intentional Wealth Advisors
Start your pension now....

£1k dvidend, is £1k profit for your company. Congratulations. You've avoided 7.5% dividend tax and replaced it with 19% corporation tax.

[TheGreenBastard]

£1k dvidend, is £1k profit for your company. Congratulations. You've avoided 7.5% dividend tax and replaced it with 19% corporation tax.

CTM15150 - Company Taxation Manual - HMRC internal manual - GOV.UK

"A distribution made by a UK resident company and received by a UK resident company is generally not included in the recipient company’s CT profits."

[TheGreenBastard]

Hello

I have some left over cash in my company and I'd like to use it to buy stock for 2 reasons:
- dividend paid to company are not taxed
- it's better than having cash laying around

Do you know where I can do that? I wanted to open it on ii.co.uk but they asked for my Legal Entity Identifier. This is a number for financial institutions which I'm not (just a simple 1 man contractor)

Any idea what to do?

Thank you

The LEI requirement is now required for corporate accounts I believe. I pay £70pa to the London Stock Exchange for my registration, but you can get cheaper issuers, it doesn't need to be domestic (or does it, due to leaving the EU?).

[Lance]

CTM15150 - Company Taxation Manual - HMRC internal manual - GOV.UK

"A distribution made by a UK resident company and received by a UK resident company is generally not included in the recipient company’s CT profits."

Interesting.
So the key thing is don't invest in companies outside the UK for dividend returns to a LTD company.
Are all LSE listed companies 'UK resident'? I'd assume so but it is an assumption.

[fonejacker]

just a note that your accountant might charge you more if you deal in stocks with the company as there is more work to do. best to check with them to avoid a surprise fee.

[Maslins]

Generally speaking dividends received into a company won't suffer corporation tax...but that's predominantly as remember dividends are a distribution of post corporation tax profits from the company paying it.

Threads like this come up all the time ("I want to invest my company's war chest in something with higher returns than a deposit account"). Then there's a bunch of accountants all saying it's a bad idea, with multiple valid reasons why. Then the OP ignores them as they'd made their decision before posting the question.