# What to do with company profits



## BillPoster (23 Aug 2007)

Two of us have have been directors of a small company in the north for the last 5 years. The company has managed to make a profit each year. Currently the balance sheet shows £300k. We've £100k lyng in a reserve account for about three years and now plan to take some money out of the company. Is this the right thing to do? We both have affordable mortgages on our main residences of £120k & £90k. We also jointly own an investment property value = £170k with £60k mortgage and our office premises value = £500k with mortgage = £300k Our plan is to take 50K each out of the business and just pay it off our PPR mortgage. We are aware of the tax liability. Is this the right thing to do? We are debating whether to invest further in property or is it time to stop accumulating debt and reduce our personal liabilities. We are both late thirties with no pension plan other than property investments.


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## z109 (23 Aug 2007)

As far as I remember from my time in the UK, you can set up a director's pension scheme that you can pay as much into as you like tax free. As you've no pensions currently some or all of the 50k could go in. You'd really need to take advice on this though, as I didn't go down the director's pension route and it was a few years ago...

Some general guidance here. (I've no connection with the website).


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## contemporary (23 Aug 2007)

do a share buy back, cgt is 20% as opposed to marginal rate income tax


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## Brendan Burgess (23 Aug 2007)

Hi Bill

I think you would be better off asking these questions on The Motley Fool as there isn't enough expertise in the UK tax system on Askaboutmoney

Brendan


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## BillPoster (29 Aug 2007)

BillPoster said:


> We are debating whether to invest further in property or is it time to stop accumulating debt and reduce our personal liabilities. We are both late thirties with no pension plan other than property investments.


 
Thanks so far but I wasn't seeking tax advice but asking a more general question about reducing personal liabilities versus continuing to accumulate investments (debt)


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## Bez (29 Aug 2007)

It sounds like you should set-up a Self-Administered Pension Scheme to get all of that dormant money out of the company tax efficiently.


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## ubiquitous (29 Aug 2007)

BillPoster said:


> Thanks so far but I wasn't seeking tax advice but asking a more general question about reducing personal liabilities versus continuing to accumulate investments (debt)



In fairness, how can you expect us to do provide meaningful advice on this issue if we are not conversant with UK tax rules regarding the various methods to  extract funds from a limited company into the hands of a director/shareholder?


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