MTD filing period
The first MTD filing period opens soon and tax payers need to be aware of what they need to do before August.
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- What we do
Taxation for individuals and trusts
Be compliant - we know the rules.
Audit and assurance services
Navigate regulatory complexity - we provide the expertise.
Accounting and taxation for business
Focus on your business - we'll manage the books and tax.
Charity and community interest companies (CICs)
Accounting for good - we have experience of CICs.
International accountancy services
Remove the hassle - let us take care of your International tax and accounting.
Bookkeeping, VAT, cloud accounting & payroll
Reduce the pain - we can handle your monthly calculations.
Tax planning
Reduce your tax liabilities - we'll show you how.
Business advisory and wealth creation
Grow your business and wealth - we know what it takes.
Family Investment Company (FIC)
An effective and flexible strategy to manage and protect family wealth, and to plan for generational succession
- Who we are
- What we do
- Taxation for individuals and trusts
- Audit and assurance services
- Accounting and taxation for business
- Charity and community interest companies (CICs)
- International accountancy services
- Bookkeeping, VAT, cloud accounting & payroll
- Tax planning
- Business advisory and wealth creation
- Family Investment Company (FIC)
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- Client stories
- Testimonials
- Contact us
Using a limited company for investments
We often get asked whether setting up a UK limited company for investments is a good idea. This is a regular query from clients who have a bit of extra cash in a trading company and do not want to pay the tax on extracting it to then invest it somewhere.
The answer as to whether it is beneficial depends on their investment goals, tax situation, and long-term plans.
Many investors consider using a limited company as a tax-efficient way to manage and grow their investments and it is particularly beneficial in the following scenarios:
- Long-term investment strategies where profits can be reinvested without immediate withdrawals.
- High-income individuals seeking to reduce personal tax exposure.
- Family businesses or investment portfolios where shares can be distributed among family members for inheritance planning.
- Corporate structures investing in stocks, bonds, and commercial property.
Benefits
Lower tax – Profits made by a limited company are subject to corporation tax rather than personal income tax. The UK corporation tax rate is generally lower than higher-rate and additional-rate income tax brackets for individuals. This can lead to significant tax savings, particularly for high earners.
Retained earnings for reinvestment – Unlike personal investments, where gains are taxed immediately upon sale, a company can retain profits and reinvest them without facing personal tax liabilities.
Inheritance tax planning – A company structure may offer more flexibility for estate planning and passing wealth to future generations. By holding investments through a company, you can structure ownership via shares and potentially reduce inheritance tax liabilities.
Drawbacks
Higher compliance and admin costs – Running a limited company comes with additional responsibilities such as filing annual accounts and preparing corporation tax returns. Accountancy fees and other costs may outweigh the benefits for smaller investments.
Tax on withdrawals – Although corporation tax rates are lower, withdrawing money from the company through dividends or salary may result in personal tax liabilities. This is an important consideration for those who need immediate access to investment returns.
Asset introduction – Previously owned assets being sold to the company could result in capital gains tax or stamp duty if not planned correctly.
A UK limited company can be useful for managing investments efficiently but it’s not for everyone. If you’re considering this route, consulting with an accountant is essential to ensure the structure aligns with your financial goals.
Every investor’s situation is unique and professional advice can help you make the most informed decision.
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Companies House identity checks
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