Investing cash from a Ltd Company

**minstrel** · 28 March 2008, 18:07

Originally posted by aceboy View Post

Morning, I am an IT contractor, I am able to stay below the 40% tax threshold, this means my ltd company is becoming quite cash rich. I would like to invest this cash somewhere.

Can I buy property for investment / rental purposes with this cash, and providing all the rental income goes into the company and not to me, does this means it is not treated as personal income?

Also is it possible to invest in FTSE100 listed stocks on behalf of the company?

What else do i need to look out for? Are there any good sources of information for this?

Many Thanks

You'll find lots of threads on here describing the options.

Basically, YourCo can theoretically invest in whatever you like. However, if you have too much cash invested there is a risk you could be treated as an investment company which would mean you would have to pay higher corporation tax.

Also, you need to consider the fact that you are going to need a strategy for taking the money out at some point avoiding higher rate tax or all you would be doing is deferring tax.

One very important consideration is CGT. As an invidividual you can get tax relief on £9k Capital Gains per year. Company investments do not get this so you would have to pay full CT at around 22% on any gains.

Pensions are an option worth considering for long term investment.

Buying property and renting it out through your company is probably not a great idea as there are better allowances etc as an individual rather than a company. Mortgages might also be tricky through the company.

**moorfield** · 28 March 2008, 19:55

Easiest (long term) investment option is via pension contributions into a SIPP wrapper.

Extract 25% tax free at 55.

This conversation has been done to death on here just search for similar threads.

Investing cash from a Ltd Company