Excess money in PLC bank account, what can I do with it?

J

jumbod

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Hi,

First of apologies if I have posted in the wrong forum but still quite new to this site. I have a PLC I set up about 3 years ago for my software contracting business (I was working with an umbrella company for a number of years before). There is only me in the business with my wife as company secretary (she doesn't get paid a wage as has her own full time employment). I have always paid myself less than I invoiced and currently the company bank account has about 100k in it with no outstanding debts.

I'm hesitant to increase my salary as frankly it's not needed right now and I don't want to pay excess income tax. Short of going to speak to a financial advisor is there a simple way I can earn some return on this money that doesn't involve a lot of risk or managing the investment? I bank with AIB. I am aware I can pay large sums into a pension but that isn't really appealing to me.

I am sure there are loads of issues I haven't thought of so really glad to hear from people in similar situations and how they managed their company finances.

Thanks,
 
Putting it into a pension is the best thing to do. Otherwise set up an investment bond through the company and invest it. The company is taxed at 25% on the gain instead of 41% which individuals have to pay.
 
If that money has been there accumulating, you are paying corporation tax so I would get it into a pension before your next year end.
 
Steven Barrett said:
Putting it into a pension is the best thing to do. Otherwise set up an investment bond through the company and invest it. The company is taxed at 25% on the gain instead of 41% which individuals have to pay.
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40%-45% once close company surcharge is included.
AndroidMan said:
If that money has been there accumulating, you are paying corporation tax so I would get it into a pension before your next year end.
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+1

The OP badly needs an accountant.
 
T McGibney said:
The OP badly needs an accountant.
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I do have an accountant but he doesn't do investment advice, the services included are standard payroll, vat returns etc. Is this something I should be expecting my accountant to do?

Steven Barrett said:
Putting it into a pension is the best thing to do. Otherwise set up an investment bond through the company and invest it. The company is taxed at 25% on the gain instead of 41% which individuals have to pay.
Click to expand...

As mentioned pension is not really appealing to me but if there is no other option I will probably put a chunk of it there. I had no idea about an investment bond so thanks for suggesting, I'll do my research on this.

Is doing something like opening an account (for the business) in a European bank that offers higher deposit interest payments something I could look at, would there be any implications on my company from doing this?
 
jumbod said:
I do have an accountant but he doesn't do investment advice, the services included are standard payroll, vat returns etc. Is this something I should be expecting my accountant to do?
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It's not investment advice you need at all. (Few accountants offer investment advice as a service either, and for good reason.) As things stand, you've presumably already paid Corporation Tax at 12.5% on all company earnings to date and stand to suffer perhaps another 50% on the eventual extraction of those funds from the company. This is a cumulatively high tax burden and I'd argue an unnecessarily high one.

By the way opening a bank account abroad to earn literally a few quid in interest each year sounds mad in terms of effort and bureaucracy vs reward.

But each one to their own.
 
T McGibney said:
40%-45% once close company surcharge is included.

+1

The OP badly needs an accountant.
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Doesn't apply when the money is invested.

I see Ger has answered that too.


jumbod said:
As mentioned pension is not really appealing to me but if there is no other option I will probably put a chunk of it there. I had no idea about an investment bond so thanks for suggesting, I'll do my research on this.

Is doing something like opening an account (for the business) in a European bank that offers higher deposit interest payments something I could look at, would there be any implications on my company from doing this?
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Corporate accounts typically don't get the same rates as individuals so you may not get the same rate.

Either way, be prepared for a lot of paperwork if investing through your company. Memo and articles of association are required for example.
 
Thanks for all the input everyone, it seems like pension payments or salary are really the only way to utilise this money without jumping through lots of hoops. I guess I'll be increasing my salary for the rest of the year
 
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