The 'problem' of Company cash
It may be a good problem to have but … what can you do with excess cash held by a company? You may have considered increased salary and/or dividend or further pension contributions. Where do you turn when you have exhausted those options and cash can’t be extracted without triggering excessive tax charges for the director/shareholder?
Generating a return when interest rates are low
The company earns little or nothing on bank deposits.
Would you be interested in an investment offering a target return of 6%pa ?
Effect on Entrepreneurs’ Relief
Capital Gains Tax is payable on exit from the business though the rate is reduced to 10% where Entrepreneurs’ Relief is available. If a business holds non-trading assets – including surplus cash – when it is sold, the availability of Entrpreneurs’ Relief can be restricted and higher rates of CGT may be payable.
Would you be interested in deploying surplus cash into qualifying trades to restore the availability of Entrepreneurs’ Relief ?
Effect on Inheritance Tax
On the death of a shareholder, his estate may be subject to inheritance tax. If the qualifying conditions for Business Property Relief are met, there is 100% relief from the IHT attributable to the value of the shareholding. However, the availability of BPR may be restricted if a company is holding excess cash.
Would you be interested in employing surplus cash in lending activities that would satisfy the qualifying criteria for BPR ?
Speak to us at SWLaw Investment & Financial Planning Ltd …
… we can help you find an investment opportunity to give all these benefits !