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Considering the economic impact of the current situation.. If you have £85,000 in your account you are protected should the bank fail.
If you have over 85k in a personal account it’s relatively easy to spread the risk amongst various banks and savings accounts.
If you have a business account its not so easy to spread the risk(?). Other than taking more salary/dividends can anyone recommend ways to spread the risk from that account?
Just open another 1 to put the surplus into that’s what I did years ago,might be a bit harder now though.
Easy to have accounts with different banks to hold cash on deposit.
Interest bearing account with another outfit in the name of the business. Rates are paltry but thats not your motivation here.
In order for the money to reain undrawn for HMRC it must remain in the name of the business.
This is why the banks are underwritten by the govt as most businesses will have many times more than 85k in their accounts- hence the state ownership of RBS, Lloyd's etc during 2008.
If they had failed many businesses would have been destroyed.
You can open an account with Hargreaves Landsdown in the company name and move cash into there which you can then invest into a cash saving bond or maybe a “safe” tracker fund ( those existed up until a month ago when the world turned upside down)
It would spread the risk and also mean the cash is working for you a bit.
There are other banks that you can open an account in the company name too.
Some of the online challenger banks are also very simple to get set up, like Starling etc and still cover deposits.
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You have to be careful doing this as it can be a red flag if planning to claim Entrepreneur's Relief later. It should be arguable but with the crackdown on ER it is a risk I personally would not take.Quote:
Originally Posted by mr noble
That’s interesting. Can I ask why it would affect ER?
I’ve always thought it a bit crazy that so many small/med sized businesses have 5/6/7 digit sums of cash sat in their bank accounts deflating away. Why are they not allowed to put it into a decent savings account or tracker fund?
I appreciate that having the company money in a tracker fund for the last month would ya e been a bit horrific, but nevertheless to seems fair enough for companies to be allowed to move
Their cash into a savings vehicle.
I was warned by our accountants that in order to get HMRC approval you have to pass certain tests. One is the "trading company" and if you are not using your company cash it can be considered an investment company - especially if it is invested. This can be challenged on contribution to profits, time spent on managing the cash vs trade etc. but it was suggested for a small gain not worth the risk.Quote:
Originally Posted by mr noble
Thanks MB2.
I need to speak to my accountant.
Any specific bank business accounts recommended?
Looks like we will defer VAT payments until next March so it makes sense to transfer to another account.
Ideally a different bank to benefit from the 85k protection, maybe even one that pays some interest (if any do these days).
Any advice appreciated.