Inflation and utilising company cash

Interest rates rose again this week and Bank of England predicts inflation could hit 10% this year, what does that mean for cash in your limited company? Cash in the bank is likely getting minimal interest, and if the cost of goods and services rises by 10% in the next year your cash will effectively be worth less and is not working for you.

Cash in the business could be invested in bonds, better rate deposit accounts or investments, we can refer you to an IFA. Or you could extract the cash and then invest it personally, even if you are capping income at £50k p.a. to avoid higher rate tax and child benefit charges there are other ways to extract cash:

A director loan for a fixed period with the low official interest rate attracts no tax, as long as repaid within 9 months of the year end

Corporate pension contributions can be made for director/owners as part of their package and do not require relevant earnings

Electric zero emissions cars are very tax efficient

Speak to us today.

(Not investment advice, speak to an IFA before making any investments)