Investing Surplus Funds In A Limited Company

[ron505]

I have some funds in a limited company which I'd like to invest in shares, without extracting from the company (and incurring the income tax on the dividends).

Has anyone done this?

A recommendation for a broker that accepts limited company accounts would be useful.

Also, the information I can find online re the tax treatment is inconsistent. A couple of articles (as below) talk about penal taxes on investment income rising to 40% within the company but other articles don't mention this and I can find no mention of it on HMRC's website which leads me to conclude these are probably incorrect.

https://realbusiness.co.uk/investing-sh ... ed-company

https://businessadvice.co.uk/legal-advi ... ple-truth/

Any helpful information appreciated

Ron

[Walkeia]

HL also allows limited companies to hold an account (and was a lot easier to set up than IBKR)

I have done this in the past; my partner is currently doing this - placing her excess company profits into 1-2y gilts. Hmm tax implications I am not 100% as my knowledge is old and I've left the country - but when I did it my understanding was that dividends the company received were not taxable (given corporation tax had already been paid on the cash flow). So it is a vehicle to defer paying the income tax on dividends you mention in the hope it compounds up over time - fine if you don't need the money in the near term and the government doesn't normalise dividend tax rates with income tax rates say (if they did this I would expect they would phase any change like this).

[y0rkiebar]

Not sure about dividend income, but the savings interest my limited company received (from Business savings accounts) was subject to corporation tax.