Investing the profits your business has made in a successful investment vehicle can bring rich rewards. There are many options available through the insurance and equity markets, as well as the option to invest in other business opportunities. Taking a decision of this enormity is not easy – make sure you have all the facts you need to hand by getting good advice.
Open-Ended Investment Companies (OEICs)
Limited companies can protect their investment income from tax by investing in OEICs. The taxman will reduce the tax due on any capital gain you make by means of an indexation allowance that takes into account the increase in inflation. Not only that, you don’t need to pay tax on any growth in your investment over and above inflation until you cash it in.
Your dividends will also be free from further corporation tax provided your investments are in UK companies.
- Access to your investment is easy – the investment can be realised in whole or in part at any time.
- Encashment occurs within 5 working days of receiving your request.
- There’s no upper limit on the level of investment a limited trading company can make.
But remember, OEIC investments can be equity-based and therefore the capital value of your investment can go down as well as up. Past performance is no guide to the future.
If you are interested in looking at investing in OEICs, please contact us.
Pension Scheme Investment via Small Self-Administered Schemes (SSAS)
One option a company can consider is to establish a self-administered occupational scheme for the business. This would involve setting up a parallel company – the pension fund. This company pays no tax and has no overheads. The beauty of such a scheme is that the company can put the money into the SSAS free of corporation tax, then borrow back up to 50% of the fund. However, these loans can only be made to the business, not to individuals and must be fully secured.
Contact us to arrange a free initial no-obligation meeting to look at how suitable this option might be for your business.
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