djpix99
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Post by djpix99 on Nov 1, 2022 9:55:10 GMT
Hi all,
I'm looking into investing in P2P and other investments using a Limited Company setup specifically for this purpose and have a few questions I'm hoping forum users may be able to help with.
1) What SIC code do others use?
2) Which banks are comfortable opening accounts for private investing companies? I bank with Starling & Revolut, both don't look to support these type of companies.
Thanks
James
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djpix99
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Post by djpix99 on Nov 3, 2022 8:35:21 GMT
Can anyone offer any insight?
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rocky1
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Post by rocky1 on Nov 3, 2022 9:02:44 GMT
just google your question and you will find every thing you need to know.talk to your accountant or financial advisor.
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Post by c64 on Nov 3, 2022 9:27:38 GMT
64991, if you are just looking at incorporating your own activities. Of course you are then actually ruling out access to personal accounts in p2p, FSCS-protected market-leading high interest savings accounts, ombudsman consumer protection in many circumstances etc. If it's joint assets you hope to pass on to other family members then an FIC may be a more appropriate structure.
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djpix99
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Post by djpix99 on Nov 3, 2022 9:54:48 GMT
Thanks c64, that's great. |
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Post by Ace on Nov 3, 2022 10:03:49 GMT
I'd be interested in hearing about the pros and cons of doing this. If you do come across any particularly informative articles/resources I'd appreciate it if you provided a link. TIA.
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Mousey
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Post by Mousey on Nov 3, 2022 10:09:08 GMT
From my coverage of the Unbolted litigation I understand a company participating in commercial lending could be seen as performing a regulated activity.
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djpix99
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Post by djpix99 on Nov 3, 2022 15:03:24 GMT
From my coverage of the Unbolted litigation I understand a company participating in commercial lending could be seen as performing a regulated activity. That's useful to know, just reviewing your blog posts on Unbolted. If I'm honest I I would probably loan directly to property investors I trust and possibly on Uown (non p2p)
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alender
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Post by alender on Jan 18, 2023 21:32:32 GMT
I have invested spare cash from my companies in P2P in the past but got out as I don't think the risk/reward ratio is right.
Interest Income from P2P is taxed at the corporation tax rate (19% small companies), you can offset costs, accountancy, using home as office, salary etc.
Never looked into what happens if you make loses through defaults or gains by trading the loans.
To withdraw the money from the company to you either have to pay yourself (or someone else) a salary and then PAYE tax and NI (employers and employees) if above thresholds or as dividends taxed at 8.75% for standard tax payer above dividend allowance which goes down to £500 in a few years.
You will also have to pay an accountant to produce and file the accounts, I do all the accounts myself which is not easy but still have to pay to file them as it requires paid for software.
In all can't see the advantage of creating a Ltd company for P2P investments, lots of expenses, book keeping etc. The only advantage I can see is that you can build money up in the company and take it out a latter date, this is only advantageous if you will be in a lower tax band in the future, might make some sense if you are planning to retire to a tax haven to save currently paying at the high rate.
I have 2 companies which I used for IT consultancy but now use for investment otherwise I would not finance a company just for this purpose. After the last budget I am currently looking to move out of the UK before removing the money from these companies and the shutting them down, once out of the UK will also take my pensions.
This is based on my own experience and research but as alway DYOR.
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Post by c64 on Feb 3, 2023 14:28:41 GMT
I'd be interested in hearing about the pros and cons of doing this. If you do come across any particularly informative articles/resources I'd appreciate it if you provided a link. TIA.
It is quite a deep dive, but probably more useful that the suspiciously simple fluff pieces you have probably found on the websites of certain accountants specialising in this.
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Post by danraj on Feb 6, 2023 9:59:28 GMT
I have invested spare cash from my companies in P2P in the past but got out as I don't think the risk/reward ratio is right. Interest Income from P2P is taxed at the corporation tax rate (19% small companies), you can offset costs, accountancy, using home as office, salary etc. To withdraw the money from the company to you either have to pay yourself (or someone else) a salary and then PAYE tax and NI (employers and employees) if above thresholds or as dividends taxed at 8.75% for standard tax payer above dividend allowance which goes down to £500 in a few years. Hi James, when investing via a company, you may use your ISA allowance on any Director's loan to your company. This allows you to benefit from tax-free interest payments from your company, thereby optimising your returns. Read more here: p2pindependentforum.com/thread/15642/directors-ifisa
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alender
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Post by alender on Feb 10, 2023 12:12:19 GMT
I have invested spare cash from my companies in P2P in the past but got out as I don't think the risk/reward ratio is right. Interest Income from P2P is taxed at the corporation tax rate (19% small companies), you can offset costs, accountancy, using home as office, salary etc. To withdraw the money from the company to you either have to pay yourself (or someone else) a salary and then PAYE tax and NI (employers and employees) if above thresholds or as dividends taxed at 8.75% for standard tax payer above dividend allowance which goes down to £500 in a few years. Hi James, when investing via a company, you may use your ISA allowance on any Director's loan to your company. This allows you to benefit from tax-free interest payments from your company, thereby optimising your returns. Read more here: p2pindependentforum.com/thread/15642/directors-ifisa Interesting concept, is there not a danger if a company was set up for this purpose it would deemed to be aggressive tax avoidance by HMRC and it will just get taxed as though it does not exist as per HMRC rules? Not sure I would want to try this and potentially get involved in a bun fight with HMRC.
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Post by danraj on Feb 10, 2023 12:38:00 GMT
The legislation states: - The main reason for the loan to the company can't be for the purpose of avoiding tax. So, unless James intends to fund his company solely with shareholder capital, he has a genunie business need to lend money into his company.
- The loan has to be on genuine commercial terms. So we perform a credit risk assessment and provide indicative, suitable interest rates.
- It can't be part of a tax avoidance scheme. We have been audited and do not offer a tax avoidance scheme.
For those concerned, HMRC offers a 'non-statutory clearance guidance notice', however they have asked us to stop referring customers to this since clearance guidance is not needed for ISA accounts. The allowance is limited to £20k a year. If James wanted to be 'aggressive' with his tax savings, he could use a tax haven. |
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