The Lemon Fool

Anyone investing in equities through their company?

I believe an LEI is needed now and Interactive Investor (amongst others) appears to offer a reasonable trading account for businesses. Any experience with this or others?

Is there any special accounting rules for this?

Thanks

I have in the past invested in quoted securities (mainly debt) through a limited company. I don't know of any rules beyond standard tax rules for corporations.

Cookie wrote:Anyone investing in equities through their company?

I believe an LEI is needed now and Interactive Investor (amongst others) appears to offer a reasonable trading account for businesses. Any experience with this or others?

Is there any special accounting rules for this?

Thanks

I'm no expert but I think there's a point at which HMRC might suggest that part of your business is not a trading business (if it invests a substantial amount in equities), and part of it is an investment business and therefore might be taxed at a different Corporation Tax rate - there may also be implications for claiming entrepreneurs relief in the future. I'm sure that there's a lot of information you could find out about ensuring part of your business doesn't become a Close Investment Company to ensure you don't fall foul of any regulations.

Cheers, OLTB.

If investing in other companies is in the Articles of Association, HMRC cannot object.

TJH

I've been investing excess cash in my company for several years now.

You will need an LEI, avoid using the LSE for this as their fees are too high.

There are no special accounting rules. Capital gains are taxed at the corporation tax rate. There isn't a different tax rate for close investment companies. It used to be the case that you got an indexation allowance for capital gains, but you will no longer receive this if you start investing now.

It is probably better to get the money out of your company into a SIPP if you can.

I use Hargreaves Lansdown for my company account. No problems there and no annual charge.

It will affect your ability to claim Entrepreneurs Relief if you have a large amount of money in the company that isn't required for business.

syrio wrote:I've been investing excess cash in my company for several years now.

You will need an LEI, avoid using the LSE for this as their fees are too high.

There are no special accounting rules. Capital gains are taxed at the corporation tax rate. There isn't a different tax rate for close investment companies. It used to be the case that you got an indexation allowance for capital gains, but you will no longer receive this if you start investing now.

It is probably better to get the money out of your company into a SIPP if you can.

I use Hargreaves Lansdown for my company account. No problems there and no annual charge.

It will affect your ability to claim Entrepreneurs Relief if you have a large amount of money in the company that isn't required for business.

Great, thanks for your insight

Where did you get your LEI? The cheapest I have seen is £48 initial and £24 renewal by Turkish Bank Takasbank (paying in local currency), but it seems a faff. The largest and reasonable priced supplier seems to be Bloomberg, £60 initial and £46 renewal (paying in US $)

Does H&L ask you to confirm you have renewed the LEI ?
Did you phone them to organise as I cant see any corporate accounts on their website?
Are the charges the same as a normal trading account? I looked at Interactive Investor, but I think H&L might be cheaper for me

I am aware of the ER and close investment company implications and without getting into a debate about interpretation of the rules, generally I am comfortable that my company will have trading profits far in excess of investment profits, cash holdings - if not then backup plan is to use as like a family investment company/closed investment company/pension and drip feed out over time. To be honest I use the all the tax efficient methods of extracting funds from the company anyway, so paying tax now or in the future is not much different

I got the LEI from the LSE, but now I am renewing it with Bloomberg. I looked at Takasbank, but I had problems with their website. Avoid the LSE and get it from Bloomberg or Takasbank if you can.

HL haven't asked anything about LEI renewal yet and I don't know whether they will. I hadn't really seen the suggestion that it may be possible to continue using a lapsed LEI. I'll probably renew it for now.

I can't remember how I applied for the HL company account. I can't see anything obvious on their website so I suggest phoning them.

The HL company account charges the same as the personal one. As I don't have any funds, I just pay dealing charges.

syrio wrote:There are no special accounting rules. Capital gains are taxed at the corporation tax rate. There isn't a different tax rate for close investment companies. It used to be the case that you got an indexation allowance for capital gains, but you will no longer receive this if you start investing now. ...

It will affect your ability to claim Entrepreneurs Relief if you have a large amount of money in the company that isn't required for business.

There's a possible similar impact on IHT Business Relief - can link to the HMRC Manual should the OP desire - if the holdings and excess cash are deemed to be excessive.

I believe the dividend income is not taxable in the company but haven't double checked nor established the position if foreign equities are involved (probably mostly covered by DTR).

cookie wrote:Did you phone them to organise as I cant see any corporate accounts on their website?

Hargreaves Lansdown do support Trusts - haven't had time to check if they support companies.

PinkDalek wrote:I believe the dividend income is not taxable in the company but haven't double checked nor established the position if foreign equities are involved (probably mostly covered by DTR).

None of my dividend income is taxed - includes both UK equities and Vanguard equity ETFs domiciled in Ireland. No double taxation.

syrio wrote:

PinkDalek wrote:I believe the dividend income is not taxable in the company but haven't double checked nor established the position if foreign equities are involved (probably mostly covered by DTR).

None of my dividend income is taxed - includes both UK equities and Vanguard equity ETFs domiciled in Ireland. No double taxation.

I take it those don’t involve foreign withholding tax.

There’s a detailed Q & 3A via Google’s cache at “Taxation”, available by searching “Advice is sought on how a dividend from a foreign company is to be treated in the hands of a UK corporate shareholder”.

syrio wrote:I've been investing excess cash in my company for several years now.

If you have a personal service company, to what extent can it be used as a tax shelter, once the allowances on SIPPs and ISAs have already been utilised?

Alaric wrote:If you have a personal service company, to what extent can it be used as a tax shelter, once the allowances on SIPPs and ISAs have already been utilised?

Not much. Depends on your circumstances, but can't really be compared to SIPPs and ISAs. Unlikely to be any benefit to putting money into it as you will be paying tax on capital gains, interest and when you take it out. However if you already have money in there, it may be better to keep it there and withdraw slowly in a tax efficient manner.