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Post by Deleted on Sept 29, 2015 8:28:03 GMT
I see sometimes people are investing through "company account" or a company as against investing as an individual. Does that have any advantage? Especially for a full time employed salaried person on a graduate scheme? (Who could do with saving more tax  ) |
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SteveT
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Post by SteveT on Sept 29, 2015 8:54:03 GMT
If you're already paying tax on your salaried income then the costs / downsides of operating through a company probably outweigh any benefits. If your P2P lending is your principal source of income (and so, in essence, your "job") then there can be some advantages but it will depend on your personal circumstances vis-a-vis things like pension contributions, source of your "stake" funding, whether you have other savings income, etc.
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Post by Deleted on Sept 29, 2015 9:42:47 GMT
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bababill
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Post by bababill on Oct 3, 2015 6:29:25 GMT
I do both... if the company has liquid cash then i invest from the company; no need withdraw funds and pay personal tax.
If I personally have liquid case then its from the individual.
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stevio
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Post by stevio on Oct 3, 2015 9:16:31 GMT
Depends, its not worth setting up a company purely to invest, but if you have a company that is cash rich and want more than the 2% max (or 0.1% commonly) from company savings accounts or have maxed/don't like company pension payments, then it might be worth it.
I don't see a tax advantage as my company is an Ltd. and pays CT on interest like I would pay IT personally, but 12% interest is better than 2%!
If anyone can see any tax benefits, I would be interested to hear them?
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arbster
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Post by arbster on Oct 3, 2015 15:43:59 GMT
I'm also starting to look at this. My wife will soon need to pay NI to top up her State Pension, and I think being self-employed will enable her to pay Type 2 contributions. Is anyone else doing this already?
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bababill
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Post by bababill on Oct 4, 2015 0:10:49 GMT
Depends, its not worth setting up a company purely to invest, but if you have a company that is cash rich and want more than the 2% max (or 0.1% commonly) from company savings accounts or have maxed/don't like company pension payments, then it might be worth it. I don't see a tax advantage as my company is an Ltd. and pays CT on interest like I would pay IT personally, but 12% interest is better than 2%! If anyone can see any tax benefits, I would be interested to hear them? If the company is cash rich then it makes 100 percent to invest in a company scheme. Otherwise you have to pay tax to withdraw the funds and then reinvest the same lessor amount again.
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stevio
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Post by stevio on Oct 4, 2015 10:11:15 GMT
Depends, its not worth setting up a company purely to invest, but if you have a company that is cash rich and want more than the 2% max (or 0.1% commonly) from company savings accounts or have maxed/don't like company pension payments, then it might be worth it. I don't see a tax advantage as my company is an Ltd. and pays CT on interest like I would pay IT personally, but 12% interest is better than 2%! If anyone can see any tax benefits, I would be interested to hear them? If the company is tax rich then it makes 100 percent to invest in a company scheme. Otherwise you have to pay tax to withdraw the funds and then reinvest the same lessor amount again.  I think I would like to be 'tax' rich, but not 100% sure?
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bababill
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Post by bababill on Oct 4, 2015 22:44:51 GMT
have made the edit to read cash rich
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SteveT
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Post by SteveT on Oct 5, 2015 7:26:53 GMT
There are a few opportunities enjoyed by small companies (of any type), including:
- Directors determine whether and at what level it is appropriate to set salaries and/or pension contributions, which obviously affect company profit. Also what to do with net profit (after corporation tax); retain on the balance sheet or pay out as dividends.
- Employees earning between the LEL (£5824) and PT (£8060) in a year pay zero NI but receive a full year's credit towards their state pension entitlement.
- Directors and "connected persons" (eg. family members) that borrow to invest in or lend money to a "close company" (that is not a "close investment-holding company") can offset "qualifying loan interest" they have paid against their other income.
I dare say there may be others too.
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Investboy
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Post by Investboy on Jan 18, 2016 12:23:25 GMT
Reviving this thread.
Here is my scenario. I'm lending as Ltd company that is a trading company atm. I'm investing surplus in P2P. Earned interest will be in lower singled digits the total company income.
But in the future I'd like to reduce my business/trading activity and focus more on P2P/investments. I've heard that this will trigger the "investment event" - meaning my company will be classified as investment company.
My questions are:
* What exactly changes the company type from trading to investment? Is it some percentage of sources of income or something else?
* What are the tax consequences?
* What are the benefits if any?
* What are the disadvantages if any?
* Anything else worth knowing?
If this was discussed earlier or there is some info on the web will be grateful for links.
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stevio
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Post by stevio on Apr 16, 2016 17:28:16 GMT
Reviving this thread. Here is my scenario. I'm lending as Ltd company that is a trading company atm. I'm investing surplus in P2P. Earned interest will be in lower singled digits the total company income. But in the future I'd like to reduce my business/trading activity and focus more on P2P/investments. I've heard that this will trigger the "investment event" - meaning my company will be classified as investment company. My questions are: * What exactly changes the company type from trading to investment? Is it some percentage of sources of income or something else? * What are the tax consequences? * What are the benefits if any? * What are the disadvantages if any? * Anything else worth knowing? If this was discussed earlier or there is some info on the web will be grateful for links. ENTREPRENEURS RELIEF If WIND UP company there is a voluntary liquidation and company assets distributed to shareholders Reduces personal CGT to 10% (instead of 18% or 28%) o Qualify if for at least one year prior: 5% in shares in business Director or employee Companies main activities are TRADING (rather than NON-TRADING such as investment) Generally not more than 20% of the following are made up from NON-TRADING INCOME Assets Income
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Post by fallon on Apr 19, 2016 8:16:19 GMT
Both are good on their own!!
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