Entrepreneurs' Relief

[joey122]

Just looking at SJD


The company must be a trading company or the holding company of a trading group in the 12 months leading up to the date of disposal. The definition of a trading company is based on the activities the company carries on. A trading company is a company which carries on trading activities and to no substantial extent carries on activities other than trading activities.


I dont understand this - I am an IT contractor but all my business cash is invested in goverment bonds through TD Waterhouse as in a business account.

Does this affect my trading status?

[Danbro]

Er

Just looking at SJD

The company must be a trading company or the holding company of a trading group in the 12 months leading up to the date of disposal. The definition of a trading company is based on the activities the company carries on. A trading company is a company which carries on trading activities and to no substantial extent carries on activities other than trading activities.


I dont understand this - I am an IT contractor but all my business cash is invested in goverment bonds through TD Waterhouse as in a business account.

Does this affect my trading status?

Although not really in legislation, HMRC consider a company to be an investment company ( not trading ) if the company has more than 20% in investments. The 20% can be viewed as assets, turnover, management time.

It will be HMRC who would view your company to be trading or not, If you are considered to be an investment company then you would pay 28% corporation tax for example.

If you are due to claim ER in the future then it maybe beneficial to either sell your investments / transfer them into your name, you would need to do this before closing down your company anyway, which you would do to claim ER via the ESC C16 route.

Thanks
Neil

[duducontractor]

investment with asset based portfolio

hi - i am pulling my hairs out because my accountant says - "we are not FSA registered so we cannot give you advice "

i have some funds in my company,been trading for 3 years nearly.i am thinking of investing in HSBC's asset based portfolio. they take 1% fees upfront and pretty much works like pension. the returns in best case scenario is 15% . my accountant is advising me that i will loose out on ER if i do this ( i.e if this is greater than 20% of assets or profit) i won't spend much time because hsbc is doing all the work.

even if i invest 50K my returns are around 7.5k.. this is roughly 20% of my profit
50K is greater than
can you please give some guidance...?

[Clippy]

hi - i am pulling my hairs out because my accountant says - "we are not FSA registered so we cannot give you advice "

i have some funds in my company,been trading for 3 years nearly.i am thinking of investing in HSBC's asset based portfolio. they take 1% fees upfront and pretty much works like pension. the returns in best case scenario is 15% . my accountant is advising me that i will loose out on ER if i do this ( i.e if this is greater than 20% of assets or profit) i won't spend much time because hsbc is doing all the work.

even if i invest 50K my returns are around 7.5k.. this is roughly 20% of my profit
50K is greater than
can you please give some guidance...?

Hello Joey.

[sweetandsour]

can you please give some guidance...?

You'll have to tell us your question first.

[duducontractor]

hi - not sure why the first post didnot come out

hi - i am pulling my hairs out because my accountant says - "we are not FSA registered so we cannot give you advice "

i have some funds in my company,been trading for 3 years nearly.i am thinking of investing in HSBC's asset based portfolio. they take 1% fees upfront and pretty much works like pension. the returns in best case scenario is 15% . my accountant is advising me that i will loose out on ER if i do this ( i.e if this is greater than 20% of assets or profit) i won't spend much time because hsbc is doing all the work.

even if i invest 50K my returns are around 7.5k.. this is roughly 20% of my profit
50K is greater than
can you please give some guidance...?

[sweetandsour]

hi - i am pulling my hairs out because my accountant says - "we are not FSA registered so we cannot give you advice "

i have some funds in my company,been trading for 3 years nearly.i am thinking of investing in HSBC's asset based portfolio. they take 1% fees upfront and pretty much works like pension. the returns in best case scenario is 15% . my accountant is advising me that i will loose out on ER if i do this ( i.e if this is greater than 20% of assets or profit) i won't spend much time because hsbc is doing all the work.

even if i invest 50K my returns are around 7.5k.. this is roughly 20% of my profit
50K is greater than
can you please give some guidance...?

Sorry dude. I must be dumb.

I still can't work out what your question is.

[malvolio]

"What's the point at which my company ceases to be a trading vehicle and becomes an investment one, and so liable to CT at 28% and loses taper relief?" is what he's struggling to say.

In which case the answer is somewhere in here: http://www.hmrc.gov.uk/manuals/CG1manual/CG17953p.htm

but the rule seems to be based on the value of the investment against the stock value of the company. Being a freelance probably means the stock value is tiny, so he may be in trouble.

HTH

[Moscow Mule]

Being a freelance probably means the stock value is tiny, so he may be in trouble.

How do you value yourco (and hence the value of your shares)?

Is it based on the capital distribution should you wind it up today?

[malvolio]

No, it's the stock value. Physical assets and goods for sale.