Redistributing funds during credit crunch

Redistributing funds during credit crunch

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He has over £200k saved up for the future in his limited company. He is a one man band Ltd and is now anxious to protect his savings. He wants to offset these savings against his mortgage in a flexi account but because the money is the Company's and the mortgage is personal I need to work out the best way of him getting to these funds. He has said he will repay the Company the amount he was paying for the mortgage so will be at the official rate of interest therefore no BIK issue? He will have to pay S419 tax I know but does anyone know of a more tax efficient way of dealing with this.
Deborah Griffin

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Chris Caspell CTA TEP
By ccaspell
10th Oct 2008 14:05

Redistributing funds during credit crunch
There are few more tax efficient ways than zero tax to pay, which is what, in the long term, you are suggesting. You do need to look at the effect on cash-flow though. There will be a s419 charge of £50K that will need to be paid unless the director expects to repay the £200K within 9 months of the end of the year which, unless I have misread your post I don't think is the intention.

You also need to bear in mind that, at some point, the director will want to extract the money from the business and will at that time probably have to pay tax of one sort or another. You will need to do the sums for this case in point but look at taking a dividend (assuming higher-rate tax payer IT=£50K) or probably better at paying a bonus as you will get a CT deduction on the payment.

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