warchest etc

[xenomorph]

hi all
I now been contracting for 9 months.
My main goal is to purchase a property next year spring/summer time.
In terms of saving, I been keeping all profits in my ltd company and only paying myself enough to stay in the first tax band.
I know people think you need a good 3-6 months of living costs for rainy days but people I spoken to think 6 months is a lot and usually you just need 3-4.
What is the general views on here about that?
Do most of you keep the warchest in your ltd company as profit?
Also to mention I currently pay around £250 a month from the company to my pension. Not too much so I got profit left over.
In terms of purchase of property, is it recommended to take the deposit as dividends in 1 go or does it not make much difference tax wise to do it over 2 tax years?

Thanks

[BlueSharp]

some in the company, some under the bed, a bit down the back of the sofa. I have an old tin the kitchen with a bit in as well.

What I have done when needing a bulk amount is take a loan out rather than go over the tax threshold as the interest over a couple of years is way cheaper then a single tax hit. As long as uou can make the repayments without going into the higher band and you have a decent credit rating and not already loaded with debt.

[ladymuck]

Your warchest should be whatever meets with your risk appetite. So some will say 3-4 months, other will say 6-9 months and so on. It's more about your confidence in the time it would take to find the next contract when your current one ends.

If you're going to take dividends for your deposit I personally would take it over two years if possible, simply to even out the tax hit a bit more. However, as suggested, do look at other ways to legitimately draw down the funds and check the sums - your accountant will be able to help with this. A loan from the business to you is perfectly legal if properly documented and is actually repaid with interest.

[northernladuk]

Everyone thinks they are Billy big bollox a few years in and that they'll never be out of a gig but it happens to the best of us. We've got some very experienced people on here who have done 4 months + without work. I did 5 myself last year. It happens so your warchest is there to make sure you can get through the worst unscathed. It's not a token gesture or something that can be cut to a minimum when you fancy it.

A 6 month war chest is not a lot, at 3 months out of work you'll start sweating. 4 to 5 you'll be tulipting yourself. That's not what it's there for.

6 months + at a minimum I'd say, particularly when we've got a national pandemic going on and IR35 hitting next year. To start scrimping in your warchest right now is, IMO, beyond stupid.

That's my opinion anyway.

[xenomorph]

Everyone thinks they are Billy big bollox a few years in and that they'll never be out of a gig but it happens to the best of us. We've got some very experienced people on here who have done 4 months + without work. I did 5 myself last year. It happens so your warchest is there to make sure you can get through the worst unscathed. It's not a token gesture or something that can be cut to a minimum when you fancy it.

A 6 month war chest is not a lot, at 3 months out of work you'll start sweating. 4 to 5 you'll be tulipting yourself. That's not what it's there for.

6 months + at a minimum I'd say, particularly when we've got a national pandemic going on and IR35 hitting next year. To start scrimping in your warchest right now is, IMO, beyond stupid.

That's my opinion anyway.

You talking about leaving that warchest money in company accounts right and not withdrawing?

[ladymuck]

You talking about leaving that warchest money in company accounts right and not withdrawing?

Yes, I would. If you withdraw the money from your company you will have to pay tax on it. Unless you need the money, leave it where it is. Find an interest-bearing account (good luck!) and make sure it's not with the same group as your main bank account to double up on the FSCS coverage should the bank go pop (assuming you have more than £85k stashed).

[xenomorph]

yeah I deffo want to leave 6 months worth of cash in cmpny in case of problems.
will look into loans instead if I come to buying property time and I not got enough for deposit withdraw plus 6 months leftover.

another question is, is it better to pay pension via ltd company or personally?

[ladymuck]

yeah I deffo want to leave 6 months worth of cash in cmpny in case of problems.
will look into loans instead if I come to buying property time and I not got enough for deposit withdraw plus 6 months leftover.

another question is, is it better to pay pension via ltd company or personally?

I was advised to put pension through my Ltd Co to get CT relief on the expense. Ask your accountant.

[elsergiovolador]

Everyone thinks they are Billy big bollox a few years in and that they'll never be out of a gig but it happens to the best of us. We've got some very experienced people on here who have done 4 months + without work. I did 5 myself last year. It happens so your warchest is there to make sure you can get through the worst unscathed. It's not a token gesture or something that can be cut to a minimum when you fancy it.

A 6 month war chest is not a lot, at 3 months out of work you'll start sweating. 4 to 5 you'll be tulipting yourself. That's not what it's there for.

6 months + at a minimum I'd say, particularly when we've got a national pandemic going on and IR35 hitting next year. To start scrimping in your warchest right now is, IMO, beyond stupid.

That's my opinion anyway.

Fortunately, when the contract ends you can fly off to Vietnam or Cambodia and suddenly your 3 months' warchest becomes 2 year+. Then fly back in when there is a gig worthy of flying into.

[northernladuk]

Fortunately, when the contract ends you can fly off to Vietnam or Cambodia and suddenly your 3 months' warchest becomes 2 year+. Then fly back in when there is a gig worthy of flying into.

There is that I guess.