This Content Was Last Updated on November 5, 2015 by Jessica Garbett
A common question, from a client with a small limited company:
Is it possible to put some money away in stock/shares, bonds, or other investments from Business account? If so, would this be subject to corporation tax for the tax year it has been invested?
And the reply:
Yes, it is possible, but I would not recommend it. I always recommend investment activities are carried out in your personal name, not the company name.
The investments would need to come out of profits after Corporation Tax.
Corporation Tax would be payable on any profits / gains / income from the investments.
There are a number of reasons why investment is normally better off in personal name:
– Personal Capital Gain Tax regime is better than the similar provisions for Corporation Tax on Gains
– Investments are isolated from trading risks (including IR35 where relevant)
– Investment activities in companies can jeopardise the tax trading status of a company; that can be of particular difficulty if the company is ever shut down and you want to take advantage of the generous Business Asset Taper Relief rules.