Corporate Financial Investment

Corporate Financial Investment

If you are a company director, there are a number of key investment and pension considerations that relate to you personally and also to your company. Here we summarise the main aspects we deal with in respect of corporate financial investment.

Warwick: Wealth Management Advice Services

Charlotte engaged the services of ASPL for wealth management advice after she had inherited a sizeable fortune. She was considering emigrating, and purchasing a number of properties where her children lived, in Asia, Australia and London.

She wanted to invest on a long-term basis, but also required a flexible, sizeable capital withdrawal facility to enable property purchases to be made, as and when she wanted.

Charlotte did not want to take much risk with the portfolio, and wanted income/capital withdrawals to be paid into her Guernsey bank account(s).

We have managed her capital and income without giving rise to any taxation liabilities, to date, and provided her with a suitably flexible and diverse portfolio, that meets her needs.

NB. Whilst the Client names have been changed for Client privacy purposes, these case studies are actual ASPL Client case studies.

Directors

Most of our Clients are Company Directors that are still accumulating wealth or are about to enter the retirement phase of their lives.

Either way, we believe that our services are focused in this area as we have a great deal of experience here and enjoy working with business people.

Establishing Staff Pension/Staff Life Assurance or Keyman Schemes

Whilst we are often asked to provide advice in these areas, our focus remains primarily on the individual Company Directors’ affairs.

Company Investments

Businesses often accrue monies under deposit either because they are awaiting an investment opportunity or sometimes because they simply do not know what to do with it. There are a number of options open to businesses.

Investing company money that has built up within a business bank account poses a challenge to Company Directors. Whilst we are all familiar with Deposit Savings Accounts, rates of interest have been particularly poor for some time and remain so (2015) but nevertheless it pays to shop around.

For longer term investment, Corporate Investment Bonds are available although different tax rules apply depending upon your accounting basis: if the company operates on a “fair value” accounting basis, Corporate Tax will typically be due on any increase in the value of the Bond from one year to the next. Those companies that apply the “historic cost” basis will continue to benefit from tax deferral in respect of the Bond (this is because the original value of investment is normally shown on the balance sheet each year until the Bond is finally encashed). This historic cost basis therefore gives you tax planning advantages as you will be able to control the point at which tax is paid. Also you will be able to control cash flow by taking profits from the Bond in a year when overall profits are lower.

It should also be borne in mind that how you invest your cash in the business, could have an effect on the tax rate you pay on the ultimate sale of the company. Where investments are made in the company we will work with your tax adviser to ensure that your tax position on exit is not jeopardised.

Pension Schemes

As opposed to paying contributions yourself as an individual, have the company invest the pension contributions on your behalf (making sure that you follow the “wholly and exclusively” HMRC rulings to ensure a corporate tax deduction is available ).

It is particularly useful to have the company pay the pension contributions when, for example, your salary is kept low because most of your remuneration is taken via dividends.

Again, this requires specialist advice so please contact us.

Buying Premises via a Pension

Your old, frozen and current pension funds may be used to acquire commercial property. The idea is that the property ownership can be split between you personally and/or your business, and/or your pension funds. This therefore gives you a route to enable the purchase of the commercial premises you perhaps thought you could not afford. We could help you structure the deal so that your company ends up paying rent into your own pension fund. This is of course a complex area so please contact us for advice.

Cash Management and Investment

Businesses often accrue monies under deposit either because they are awaiting an investment opportunity or sometimes because they simply do not know what to do with it. There are a number of options open to businesses.

Investing company money that has built up within a business bank account poses a challenge to Company Directors. Whilst we are all familiar with Deposit Savings Accounts, rates of interest are have been particularly poor for some time and remain so (2015), but nevertheless it pays to shop around.

For longer term investment, Corporate Investment Bonds are available although different tax rules apply depending upon your accounting basis: if the company operates on a “fair value” accounting basis, Corporate Tax will typically be due on any increase in the value of the Bond from one year to the next. Those companies that apply the “historic cost” basis will continue to benefit from tax deferral in respect of the Bond (this is because the original value of investment is normally shown on the balance sheet each year until the Bond is finally encashed). This historic cost basis therefore gives you tax planning advantages as you will be able to control the point at which tax is paid. Also you will be able to control cash flow by taking profits from the Bond in a year when overall profits are lower.

It should also be borne in mind that how you invest your cash in the business, could have an effect on the tax rate you pay on the ultimate sale of the company. Where investments are made in the company we will work with your tax adviser to ensure that your tax position on exit is not jeopardised.

People

Midlands: Financial Planning for Company Directors

Four Directors of a PLC approached us as the Company Final Salary Scheme was about to go over to the Financial Assistance Scheme (FAS) as there were insufficient monies in the Scheme to maintain benefits.

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Adrian Smith

Adrian is a Chartered Financial Planner and a CERTIFIED FINANCIAL PLANNERTM professional. He established Adrian Smith & Partners Ltd. in June 1999. His qualifications include Chartered Financial Planner, Certified Financial Planner (CFP), Financial Planning Certificate (FPC), Advanced Financial Planning Certificate (AFPC), Securities Institute Foundation Certificate, Dip PFS.

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Ivan Hutchings

Ivan is a CERTIFIED FINANCIAL PLANNERTM professional and joined ASPL in 2003.  His qualifications include: Certified Financial Planner (CFP), Advanced Financial Planning Certificate (AFPC), Financial Planning Certificate (FPC), G60 Pensions.

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Accreditations

Adrian Smith

Chartered Financial Planner
Chartered Wealth Manager
CFP-CM

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