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Company Lump Sum

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  • 12-11-2020 6:50pm
    #1
    howyegettinon1
    Registered Users Posts: 318 ✭✭


    for the mods: I am not looking for financial advice or some shady ways to pull one over on revenue



    I am looking for some sugestions on what to do with a lump sum in company account, I am going to get in touch with the accountant for advice but would like some ideas to bring to him incase he/I hasnt though of it


    I've a large sum built up this year sitting in a ltd company that Im not sure what to do with, I've maxed out the director salaries(in the 20% bracket) and took out all posible expenses and bought what I could through the company already



    My options are as I see them;
    - put into pension at 0% tax
    - take it out and part with 51% of the money in taxes
    - leave in company and get hit with corp tax - maybe leave it in company until I want to take time off or I'm out of a job and pay the corp tax plus 20% as income down the line - this way id lose about 32% to the tax man vs the 51% above





    Is there any other options? I was thinking maybe invest it?(that way I wont be paying corp tax on it) cash in the investment when I need the money again? - not sure if that exactly right/legal or possible?



    Put it towards a property maybe?



    I've also heard you can eventually close the company down and take out a lump sum tax free after so many years?
    Tagged:


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    #2
    marizpan
    Registered Users Posts: 443 ✭✭marizpan


    Is it a close company?
    Any undistributed income from investment or professional sources are subject to the close company surcharge.

    Pension or salary is most common but there is no easy tax free option


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    #3
    howyegettinon1
    Registered Users Posts: 318 ✭✭howyegettinon1


    marizpan wrote: »
    Is it a close company?
    Any undistributed income from investment or professional sources are subject to the close company surcharge.

    Pension or salary is most common but there is no easy tax free option

    Yes i think it is a close company as its only 2 directors, the surcharge is on the profits made from investments, correct?

    I know there is no tax free option just looking for one with lowest amount


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    #4
    Bobby1984
    Registered Users Posts: 267 ✭✭Bobby1984


    howyegettinon1 wrote: »
    Yes i think it is a close company as its only 2 directors, the surcharge is on the profits made from investments, correct?

    I know there is no tax free option just looking for one with lowest amount

    Professional services company’s need to pay a surcharge if they are a close company.

    Investing in property won’t affect the amount of CT you pay as it is based on annual profits.

    Investing in property is possible but you will pay a surcharge on investment income.


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    #5
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    howyegettinon1 wrote: »
    Yes i think it is a close company as its only 2 directors, the surcharge is on the profits made from investments, correct?

    I know there is no tax free option just looking for one with lowest amount

    Look at retirement relief (0% cgt) and entrepreneurs relief (10% cgt)

    Your accountant will be able to go through the options.

    There are two surcharges, s440 and s441, the latter being for professional services such as architects, solicitors etc & is a bit more onerous.


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