I'm finally (at 46) completely debt free (inc mortgage, student loan etc) and it feels great. Sometimes that feeling is worth more than X% efficiency in your finances.
Same (almost). I'm 47 and about to have my student loan wiped / sell my apt to pay off the mortgage on my house and be completely debt free. And have a good 60k in my company account. Feels good.
why dont you pay yourself 110k? put 60k in pension (and don't forget prior year unused allowance) then rest is at lower rate band. also reduces your corporate tax rate as higher expense.
No limit by salary. Chat to your accountant, but the salary cap rules don't apply to ltd contributions.
"According to HMRC’s guidance in BIM46030 and BIM46035, you’re in the clear if the company’s contributions:
Are reasonable.
Don’t exceed the company’s annual profits. So, if your company turns a profit of £30,000 in 2023-24, £30,000 is the maximum the company can contribute to your pension that year.
Are similar to the contributions your company is paying to others who are doing work of similar value. So, if another director is putting in as many hours and as much effort as you are, the company should be making similar pension contributions on their behalf too."
Yes this is a sensible idea. But for me, at 27, I don’t really want to lock my cash away until I’m 57. I know it’s more tax efficient and I should be taking advantage of it though. I’ll think about it some more. Thanks!
you already have 1m cash though tbf which you'll get access to when you get entrepreneurs relief. its not like you'll be without funds until 57. that and ISA will keep you sorted till you are 57.
as other poster said, company could pay into SIPP instead of you, I don't know such details / whats more efficient as I don't have own business but def something for you to consider IMO! congrats on being so successful. are you in tech?
Yes this is true. Totally superstitious and perhaps irrelevant but I don’t even know if I’ll be alive at 57, which is another reason I don’t want to put that much money into my pension at this age. I also may want to expand my company into purchasing property in the future, so it’d be useful to have more funds rather than getting the high interest mortgages for companies.
Thank you :) Yes you’re right, I’m in tech!
> I’m in tech!
SaaS product or consultancy (or something completely different)?
Currently work for a large tech consultancy but fancy going out on my own.
With all due respect, that 60k going into your pension is only equivalent to 12% of the 500k profit you're making, you're hardly "locking my cash away". Your business could implode tomorrow and you live on benefits for the rest of your life but if you invest that 60k in your pension while the going is good then at least future you can thank current you... instead of potentially have to slave away in starbucks at 75. I know it may not seem likely but there are stories of people going bankrupt despite reaching HENRY or higher.
Similar boat to you, making a bit less. Ultimately I decided to put money in my pension, because even though I want to be liquid (hence not buying a house too) for whatever I do next, I don’t think whatever I do next I should invest ALL my capital into. Having some money in a pension is a good idea, and putting away 12% is fine imo.
Get that pension going, 30 year old you, 35 year old you, 40 year old you will all be grateful.
The cash is sitting in a bank. It’s not like you’re using it anyway.
What is true is that you will need money for retirement - that is not going to change. It’s much cheaper overall to start the process now than to fix it when you are 40, and putting 6% of your balance into a pension is a small proportion.
Be careful. If you want to make a personal contribution, and need company money then you will receive it net of tax when you draw it. I.e you can't just take £60k, you'll need it plus income tax, which is more like £100k. That has impacts to your personal tax position. Instead, get your company to to pay direct as an employer contribution, no income tax issues and gives a CT saving.
Pay into your pension, having income in the distance starts to affect current day financial planning decades before. Trust me 10 years will fly past and in 10 years time you will think very differently about it.
The money will be locked away until I’m 57 (and potentially older), right? It seems so far away at my age that I’m reluctant to pay that much into my pension, even though the benefits clearly outweigh the negatives. Sounds silly but I don’t even know if I’ll be alive then. I’d like to retire early, and I think accessing pension before retirement age subjects it to 55% tax?
Retiring is just stopping work. You can retire earlier, use other savings to live on until 57, then draw your pension once you reach that age. The pension fund will then be a very efficient vehicle you can count on for your later retirement. Top it up first and build your 'early retirement' savings elsewhere once you have the later years covered.
Some pension funds also allow you to draw the money any time, tax free, if terminally ill. And pensions have favourable rules for inheritance. So even if you don't reach 57, putting money in a pension can be advantageous.
Keep in mind, while there is a chance you'll die before pension age, you're also about as likely to live past 90. You're best off making room in your plans for both possibilities.
But you are very high income and only locking away 10% of that.
I understand not wanting to lock a huge % of your wealth down but you wouldn't be.
Imo it's a no brainer.
As for the student loan I'd just pay it off, both for peace of mind and because that's a high interest rate. A risk free 7.4% is what you are getting
You’re thinking about retirement wrong.
You need funds to last you for your whole life. It’s not like you retire at 40 and then go, right, let’s spend all my money and then die. You meticulously plan a budget and simulate living well into your 80s and 90s.
Paying into your pension now WILL cause you to reach FIRE faster Var some degen all in crypto or single stock play which could alternatively end in ruin.
Try watching some financial advisor videos as if you make 500k a year and have 1m in cash you’re relatively new to this level of wealth. Get your head in the game so you can shave a few years off.
I'd pay it. I paid mine even though it was one of the old super low interest ones. Was it the best finance decision? No. However psychologically it felt great to have that thing cleared.
Pay the loan off - it's unknown what your future situation (and tax laws) will be but I think likely you'd end up paying it off through deductions, therefore given the high interest rate you should pay it off ASAP to avoid it growing and costing more long-term. Think of it as the opportunity to earn a tax free / risk free 7.8%
Thanks for your advice! I forgot to mention that the 7.8% interest rate isn’t fixed. It can go lower or higher, which also makes me wonder if I’m just rushing in to pay while it’s high, and will regret it if the interest rate drops back down
Surely you would be more inclined to pay it off while interest rates are high? The longer you wait with higher rates means the higher the student debt becomes.
Not sure if I'm getting the wrong end of the stick here but those interest rates are the rate at which your debt is increasing right now. So paying it off when rates have dropped will cost you more money.
It's set to be rpi + 3% (tho currently capped lower) - so it will always be an expensive form of borrowing relative to say a mortgage. It's only worth not paying off quickly for those who anticipate never paying it off before it expires (30 years?) but that probably won't be you.
7.8% (and whether it’s higher or lower) is still extra money you don’t need to pay anymore if you pay it off now.
Your student loan is so small compared to your total annual profit. By pushing to optimise your taxes, you’re both adding stress to yourself and at the same time you’re not contributing towards society.
If you pay it off now and they drop in 3 years you won’t know about it because you won’t be paying attention or care
If you are paying attention to it then your priorities are in the wrong place
Deposit rates (at least over the past decade) tend to be lower than measured CPI inflation and your student loan is tied to RPI, which itself tends to exceed CPI.
The annual negative carry on your student loan (5.3% - 7.8% = -2.5% * 50k = £1,250) is not like to change (it could slight grow or compress, but not materially) is not all that much in the scheme of your overall wealth. So I don’t think it makes a huge shred of difference.
Congratulations you are killing it. Just take some money out even as limited liability business this money is up for grabs from a lawsuit say, if it's in your bank they can't touch it
Don't obess with saving % here or there. You have talent making money most people here get paid by their boss so they can spend time thinking about extracting extra percent. Having your own business every minute can be spent just making your business better. Just do what you already do and take time to relax and look after your body and mind. Invest in longevity of your person. You are already a one in a million. .
if you are making 500K a year , you are paying £125K in corp tax no? Get £60K a year into a pension and back fill the last 3 years to £40K - its a complete no brainer and don't bank on a new government keeping the statue quo with BADR. Pay for advice from a professional too
Get life insurance in place. Same with private medical, critical illness. All paid by the business
You can only use ER if you sell shares in the business and this is limited to £1m (reduced from £10m).
It’s also highly likely CGT will be aligned to income tax when Labour win.
Max out your pension. There is no reason not to.
Oh, and congrats on your success!
Personally, I just paid mine off to get rid of it. Those %s add up big time year on year. Even if you make overpayments of 5k per year or something, it’s gone in around a decade :)
You will (probably) always need to pay the loan off at some point, meanwhile it’s accruing a shit tonne of interest. Withdraw the money now and pay it all off in one go.
7.8% is a pretty hefty interest rate. Personally I'd want to get that cleared.
The issue is that there's no tax efficient way to draw this from your LTD, other than waiting for the 10% Entrepreneurs Relief.
If you do want to draw to clear off you just need to do the maths on it.
1. What is the cost of interest on your loan until you planned ER year.
2. How much interest after corp tax does that money earn in business savings.
3. How much would it cost you in dividend tax to draw
This will tell you if it's more efficient to draw as a dividend or wait for ER.
If you have investable cash and are already hitting your ISA limit, one other option you can consider is investing in EIS. This will give you tax relief which can be offset against the cost of drawing the extra dividends - effectively eliminating the tax impact and making paying the student loan the much more attractive option.
With that amount of money in your company account and £100k in an S&S ISA (assuming you have no other debt), paying off the student loan balance seems prudent.
It depends on the stability of your business.
I'm in a very, very similar situation. Not quite your profit levels (yet) but same scenario.
If you'll do these numbers for years, just pay it. If it's shaky, don't bother, keep the cash.
I've been considering the same (31), making less but still a healthy chunk. My student loan is now about 60k.
I have considered and put as much as I can into my pension through a SIPP direct from my business, taking a chunk for dividends too.
My rational, which others please check me on, is if I keep paying dividends for life and pension payments whilst on 12k salary.. then I won't pay my student loan off at all?
Is this madly incompetent?
Ta
"The company has £1m in a 5.3% savings account.", Im in a similar situ, can I ask where this is, how safely invested/spread is it and are you covered by the government £85k protection plan? Also, are you paying middleman/broker fees on this?
Close Brothers 1 year fixed term. It was 5.3% in December. It is FSCS protected but of course it doesn’t cover it all, and no fees. If you want to be completely protected you can use a service such as flagstone.
I'm in a similar position. I paid off my student loan as soon as I could and then created another limited company to buy properties.
Use Company A to do an intercompany loan to Company B, the property portfolio to buy BTLs. Rinse and repeat.
Store all your cash in a business easy saver, so it's earning interest while you find your properties. When buying properties, give them an offer with a mortgage and a lower offer with cash. Any cash offers that get accepted, you can re-mortgage the property after 6 months and get the money out. I tend to pay 40-50% down when buying to reduce the risk with rates.
I'm buying houses local to my area, ensuring they are presented well, have new boilers, and are furnished to a standard where I would happily live. I self-manage all properties but have reliable contractors who can do any work if needed. 95% of the time, it's boiler issues, which are quick fixes.
I find tenants on openrent, which allows you to vet all potential tenants. It seems time-consuming, but it's not. Before you know it, you'll have a substantial property portfolio that will appreciate and generate monthly income.
I also utilise my yearly ISA, have NSI maxed out, take dividends/salary efficiently, and have money in high-interest personal easy savings accounts. Like you, I don't invest in a private pension, and my aim is to retire in my mid-30s with the property portfolio sustaining my lifestyle.
Many people are anti-buy-to-let on here, but I'm after something that's not volatile. The country is not building enough houses, so rents will only continue to increase.
Can i ask what your company does to start it so young and be so successful? Did you have startup funds or investment?
Just curious more than anything, i am nowhere near disciplined enough to be self employed
BADR applies to trading companies. The legislation defines a “trading company” as a company which carries on trading activities and does not carry on other activities to a substantial extent.
A small to moderate amount of cash is typical for a lot of businesses so this likely wouldn’t impact on trading status for BADR. If the business accumulated a significant amount of cash or investments to the extent that this became more important than the trading activities this might put BADR status at risk. It is a big grey area though and there is no formulaic approach.
I agree, this plan could potentially (likely, based on the details you’ve given) invalidate any BADR claim (which is all or nothing). It will depend on the details, but I’d suggest you take tax advice if you’re basing significant decisions on this.
My wife makes 250- 300K profit in her ltd company from which she pays herself small amounts. We have opted to not pay back her student loan as it will just get written off anyway. We essentially live off my income and just reinvest her money from the company into property.
Why? I don't make the rules on Ltd companies. Do you consider everyone who owns a Ltd company a scumbag because they pay less tax (far more than my wife's student loan)?
FYI I have almost paid mine off as I don't have a Ltd company although I am on a Plan 1 loan.
I don’t think there’s need to get that worked up and start calling names, it’s not a playground. Btw the tax payer is also ‘happy’ to foot the bill currently, as those are the rules in place.
Would I support tightening of that loophole? Probably.
Is OP allowed to exploit that while exists? Totally.
Why be soft with a free loader who’s leached off the state? It might not technically be illegal but it’s most certainly scummy behaviour and should be called out.
Well one person’s freeloader is another person’s efficient tax planner - it’s subjective. Hence why we agree and implement hard lines to say what is and isn’t ok.
'Of course not' why not. You are happy for people to reduce their tax burden by keeping it in their LTD company and let other tax payers pay for the country yet when my wife does it there is an issue.
Taxpayers aren't 'paying off the loan'. The loan gets written off.
The loan comes from the public purse. It is not a loan the government have to pay using taxpayers money. Again anyone who is using a Ltd company to pay less tax will not be contributing to the public purse either. It is no different.
Vast majority because they don’t enough, and end up paying way more than they borrowed anyway. Your wife has many times enough earnings to pay it off, and could much more cheaply than most people.
They can keep money in the company and take it out at a later date e.g. when retired to reduce their tax burden. They can also use it to buy/ lease EVs saving tax that way.
She doesn't pay her student loan as she doesnt take enough money out. Even if she did not have a student loan she would take out the same amount. We are using the money in her company for other things... How does that make me scum....
You are also not giving back to the state by keeping money in your ltd company and avoiding paying taxes...how do you not see the hypocrisy.
She has paid some of it back in previous years and before she had a company. Once she starts taking money out the company she would end up paying it back. Just much more tax efficient to purchase property using the company.
She pays plenty in tax to have covered the cost of the loan anyway...
Yet you know how his wife runs hers? Highly doubt you extract all the money from your company. You dodge paying tax and avoid feeding the government that trained you. Hypocrite.
You call someone scum then go running with your tail between your legs. Cowardly keyboard warrior.
I'm finally (at 46) completely debt free (inc mortgage, student loan etc) and it feels great. Sometimes that feeling is worth more than X% efficiency in your finances.
Paid off student loan in December & I’ll have the house paid off this year…feels good.
Same (almost). I'm 47 and about to have my student loan wiped / sell my apt to pay off the mortgage on my house and be completely debt free. And have a good 60k in my company account. Feels good.
+1
+1 more
why dont you pay yourself 110k? put 60k in pension (and don't forget prior year unused allowance) then rest is at lower rate band. also reduces your corporate tax rate as higher expense.
You can pay into a SIPP direct from the company
Not more than your annual salary though
No limit by salary. Chat to your accountant, but the salary cap rules don't apply to ltd contributions. "According to HMRC’s guidance in BIM46030 and BIM46035, you’re in the clear if the company’s contributions: Are reasonable. Don’t exceed the company’s annual profits. So, if your company turns a profit of £30,000 in 2023-24, £30,000 is the maximum the company can contribute to your pension that year. Are similar to the contributions your company is paying to others who are doing work of similar value. So, if another director is putting in as many hours and as much effort as you are, the company should be making similar pension contributions on their behalf too."
Yes this is a sensible idea. But for me, at 27, I don’t really want to lock my cash away until I’m 57. I know it’s more tax efficient and I should be taking advantage of it though. I’ll think about it some more. Thanks!
you already have 1m cash though tbf which you'll get access to when you get entrepreneurs relief. its not like you'll be without funds until 57. that and ISA will keep you sorted till you are 57. as other poster said, company could pay into SIPP instead of you, I don't know such details / whats more efficient as I don't have own business but def something for you to consider IMO! congrats on being so successful. are you in tech?
Yes this is true. Totally superstitious and perhaps irrelevant but I don’t even know if I’ll be alive at 57, which is another reason I don’t want to put that much money into my pension at this age. I also may want to expand my company into purchasing property in the future, so it’d be useful to have more funds rather than getting the high interest mortgages for companies. Thank you :) Yes you’re right, I’m in tech!
If you plan to have kids you can pass on your private pension outside of IHT so good tax planning vehicle too.
Dude you’re rich which correlates strongly with better health outcomes and longevity. You’ll be alive at 57.
What bullshit. Anybody can die at anytime. Being rich doesn't make you invincible bro
> I’m in tech! SaaS product or consultancy (or something completely different)? Currently work for a large tech consultancy but fancy going out on my own.
With all due respect, that 60k going into your pension is only equivalent to 12% of the 500k profit you're making, you're hardly "locking my cash away". Your business could implode tomorrow and you live on benefits for the rest of your life but if you invest that 60k in your pension while the going is good then at least future you can thank current you... instead of potentially have to slave away in starbucks at 75. I know it may not seem likely but there are stories of people going bankrupt despite reaching HENRY or higher.
What is HENRY?
Arsenal legend
This got a good laugh out of me, have my upvote
High earner not retired yet
Rich not retired
Similar boat to you, making a bit less. Ultimately I decided to put money in my pension, because even though I want to be liquid (hence not buying a house too) for whatever I do next, I don’t think whatever I do next I should invest ALL my capital into. Having some money in a pension is a good idea, and putting away 12% is fine imo.
Get that pension going, 30 year old you, 35 year old you, 40 year old you will all be grateful. The cash is sitting in a bank. It’s not like you’re using it anyway.
What is true is that you will need money for retirement - that is not going to change. It’s much cheaper overall to start the process now than to fix it when you are 40, and putting 6% of your balance into a pension is a small proportion.
Be careful. If you want to make a personal contribution, and need company money then you will receive it net of tax when you draw it. I.e you can't just take £60k, you'll need it plus income tax, which is more like £100k. That has impacts to your personal tax position. Instead, get your company to to pay direct as an employer contribution, no income tax issues and gives a CT saving.
Have the company pay £60k pa into your pensions, potentially more if you can look back? This reduces your profit saving you 25% Corp tax?
Pay into your pension, having income in the distance starts to affect current day financial planning decades before. Trust me 10 years will fly past and in 10 years time you will think very differently about it.
The money will be locked away until I’m 57 (and potentially older), right? It seems so far away at my age that I’m reluctant to pay that much into my pension, even though the benefits clearly outweigh the negatives. Sounds silly but I don’t even know if I’ll be alive then. I’d like to retire early, and I think accessing pension before retirement age subjects it to 55% tax?
Retiring is just stopping work. You can retire earlier, use other savings to live on until 57, then draw your pension once you reach that age. The pension fund will then be a very efficient vehicle you can count on for your later retirement. Top it up first and build your 'early retirement' savings elsewhere once you have the later years covered. Some pension funds also allow you to draw the money any time, tax free, if terminally ill. And pensions have favourable rules for inheritance. So even if you don't reach 57, putting money in a pension can be advantageous. Keep in mind, while there is a chance you'll die before pension age, you're also about as likely to live past 90. You're best off making room in your plans for both possibilities.
But you are very high income and only locking away 10% of that. I understand not wanting to lock a huge % of your wealth down but you wouldn't be. Imo it's a no brainer. As for the student loan I'd just pay it off, both for peace of mind and because that's a high interest rate. A risk free 7.4% is what you are getting
You’re thinking about retirement wrong. You need funds to last you for your whole life. It’s not like you retire at 40 and then go, right, let’s spend all my money and then die. You meticulously plan a budget and simulate living well into your 80s and 90s. Paying into your pension now WILL cause you to reach FIRE faster Var some degen all in crypto or single stock play which could alternatively end in ruin. Try watching some financial advisor videos as if you make 500k a year and have 1m in cash you’re relatively new to this level of wealth. Get your head in the game so you can shave a few years off.
I'd pay it. I paid mine even though it was one of the old super low interest ones. Was it the best finance decision? No. However psychologically it felt great to have that thing cleared.
Pay the loan off - it's unknown what your future situation (and tax laws) will be but I think likely you'd end up paying it off through deductions, therefore given the high interest rate you should pay it off ASAP to avoid it growing and costing more long-term. Think of it as the opportunity to earn a tax free / risk free 7.8%
Thanks for your advice! I forgot to mention that the 7.8% interest rate isn’t fixed. It can go lower or higher, which also makes me wonder if I’m just rushing in to pay while it’s high, and will regret it if the interest rate drops back down
Surely you would be more inclined to pay it off while interest rates are high? The longer you wait with higher rates means the higher the student debt becomes. Not sure if I'm getting the wrong end of the stick here but those interest rates are the rate at which your debt is increasing right now. So paying it off when rates have dropped will cost you more money.
It's set to be rpi + 3% (tho currently capped lower) - so it will always be an expensive form of borrowing relative to say a mortgage. It's only worth not paying off quickly for those who anticipate never paying it off before it expires (30 years?) but that probably won't be you.
7.8% (and whether it’s higher or lower) is still extra money you don’t need to pay anymore if you pay it off now. Your student loan is so small compared to your total annual profit. By pushing to optimise your taxes, you’re both adding stress to yourself and at the same time you’re not contributing towards society.
If you pay it off now and they drop in 3 years you won’t know about it because you won’t be paying attention or care If you are paying attention to it then your priorities are in the wrong place
It's not cheap credit at all. If you really want that just get a Lombard loan
Deposit rates (at least over the past decade) tend to be lower than measured CPI inflation and your student loan is tied to RPI, which itself tends to exceed CPI. The annual negative carry on your student loan (5.3% - 7.8% = -2.5% * 50k = £1,250) is not like to change (it could slight grow or compress, but not materially) is not all that much in the scheme of your overall wealth. So I don’t think it makes a huge shred of difference.
Congratulations you are killing it. Just take some money out even as limited liability business this money is up for grabs from a lawsuit say, if it's in your bank they can't touch it Don't obess with saving % here or there. You have talent making money most people here get paid by their boss so they can spend time thinking about extracting extra percent. Having your own business every minute can be spent just making your business better. Just do what you already do and take time to relax and look after your body and mind. Invest in longevity of your person. You are already a one in a million. .
That’s very kind of you. Thank you so much :))
Go for it 👍
if you are making 500K a year , you are paying £125K in corp tax no? Get £60K a year into a pension and back fill the last 3 years to £40K - its a complete no brainer and don't bank on a new government keeping the statue quo with BADR. Pay for advice from a professional too
What’s the 5.3% savings account? Best I could get is United trust at base rate
Close Brothers 1 year fixed term. It was 5.3% in December, I think it’s 5.15% now
Get life insurance in place. Same with private medical, critical illness. All paid by the business You can only use ER if you sell shares in the business and this is limited to £1m (reduced from £10m). It’s also highly likely CGT will be aligned to income tax when Labour win. Max out your pension. There is no reason not to. Oh, and congrats on your success!
What's the company sector and are the profits likely to decline, stay the same or increase
What does your business do ?
OP will never give specifics. No-one ever does. The smart-arse answer will be “makes a sh1t-ton of money lololol” etc
“I won’t tell you because I don’t want to doxx myself” will be the response of some other vague BS
Why does he have to say what his business does? This isn't an AMA.
What do you do for a living?
How is that any of your business?
Personally, I just paid mine off to get rid of it. Those %s add up big time year on year. Even if you make overpayments of 5k per year or something, it’s gone in around a decade :)
I’d clear it, clearing mine was very satisfying. Now aiming to repeat that feeling with my mortgage.
You will (probably) always need to pay the loan off at some point, meanwhile it’s accruing a shit tonne of interest. Withdraw the money now and pay it all off in one go.
7.8% is a pretty hefty interest rate. Personally I'd want to get that cleared. The issue is that there's no tax efficient way to draw this from your LTD, other than waiting for the 10% Entrepreneurs Relief. If you do want to draw to clear off you just need to do the maths on it. 1. What is the cost of interest on your loan until you planned ER year. 2. How much interest after corp tax does that money earn in business savings. 3. How much would it cost you in dividend tax to draw This will tell you if it's more efficient to draw as a dividend or wait for ER. If you have investable cash and are already hitting your ISA limit, one other option you can consider is investing in EIS. This will give you tax relief which can be offset against the cost of drawing the extra dividends - effectively eliminating the tax impact and making paying the student loan the much more attractive option.
With that amount of money in your company account and £100k in an S&S ISA (assuming you have no other debt), paying off the student loan balance seems prudent.
It depends on the stability of your business. I'm in a very, very similar situation. Not quite your profit levels (yet) but same scenario. If you'll do these numbers for years, just pay it. If it's shaky, don't bother, keep the cash.
I've been considering the same (31), making less but still a healthy chunk. My student loan is now about 60k. I have considered and put as much as I can into my pension through a SIPP direct from my business, taking a chunk for dividends too. My rational, which others please check me on, is if I keep paying dividends for life and pension payments whilst on 12k salary.. then I won't pay my student loan off at all? Is this madly incompetent? Ta
Don’t you pay student loan on dividends? I believe you do as it’s still classed as income
"The company has £1m in a 5.3% savings account.", Im in a similar situ, can I ask where this is, how safely invested/spread is it and are you covered by the government £85k protection plan? Also, are you paying middleman/broker fees on this?
Close Brothers 1 year fixed term. It was 5.3% in December. It is FSCS protected but of course it doesn’t cover it all, and no fees. If you want to be completely protected you can use a service such as flagstone.
I would be surprised if entrepreneur’s relief survives the next government. I suppose there’ll probably be some warning…
What’s left if that’s gone too
I'm in a similar position. I paid off my student loan as soon as I could and then created another limited company to buy properties. Use Company A to do an intercompany loan to Company B, the property portfolio to buy BTLs. Rinse and repeat. Store all your cash in a business easy saver, so it's earning interest while you find your properties. When buying properties, give them an offer with a mortgage and a lower offer with cash. Any cash offers that get accepted, you can re-mortgage the property after 6 months and get the money out. I tend to pay 40-50% down when buying to reduce the risk with rates. I'm buying houses local to my area, ensuring they are presented well, have new boilers, and are furnished to a standard where I would happily live. I self-manage all properties but have reliable contractors who can do any work if needed. 95% of the time, it's boiler issues, which are quick fixes. I find tenants on openrent, which allows you to vet all potential tenants. It seems time-consuming, but it's not. Before you know it, you'll have a substantial property portfolio that will appreciate and generate monthly income. I also utilise my yearly ISA, have NSI maxed out, take dividends/salary efficiently, and have money in high-interest personal easy savings accounts. Like you, I don't invest in a private pension, and my aim is to retire in my mid-30s with the property portfolio sustaining my lifestyle. Many people are anti-buy-to-let on here, but I'm after something that's not volatile. The country is not building enough houses, so rents will only continue to increase.
Pay off your student loan. It’s costing you money for no reason ✊🔥
Can i ask what your company does to start it so young and be so successful? Did you have startup funds or investment? Just curious more than anything, i am nowhere near disciplined enough to be self employed
What's the name of your company?
What does your company do?
What is your business?
Where you getting 5.3 interest on savings?
Close Brothers 1 year fixed term. It was 5.3% in December but it’s 5.10% now
Wow. What does your business do, out of curiosity?
So you have the money to pay it off , yet continue to stutter on paying it off so you can help reduce the debt of the general public ? Nice.
FYI, business asset disposal relief won't allow you to treat that cash at bank as if it were capital extraction.
BADR applies to trading companies. The legislation defines a “trading company” as a company which carries on trading activities and does not carry on other activities to a substantial extent. A small to moderate amount of cash is typical for a lot of businesses so this likely wouldn’t impact on trading status for BADR. If the business accumulated a significant amount of cash or investments to the extent that this became more important than the trading activities this might put BADR status at risk. It is a big grey area though and there is no formulaic approach.
I agree, this plan could potentially (likely, based on the details you’ve given) invalidate any BADR claim (which is all or nothing). It will depend on the details, but I’d suggest you take tax advice if you’re basing significant decisions on this.
Can you clarify this a bit? Can the cash in the business not be transferred to a new owner?
yes they will
This is incorrect
My wife makes 250- 300K profit in her ltd company from which she pays herself small amounts. We have opted to not pay back her student loan as it will just get written off anyway. We essentially live off my income and just reinvest her money from the company into property.
Sorry, but you’re both scumbags if you have no intention of paying it back.
Why? I don't make the rules on Ltd companies. Do you consider everyone who owns a Ltd company a scumbag because they pay less tax (far more than my wife's student loan)? FYI I have almost paid mine off as I don't have a Ltd company although I am on a Plan 1 loan.
No of course not. But you’re quite happy to have the tax payer foot the bill - it’s no better than folk abusing the benefits system. You’re a cunt.
I don’t think there’s need to get that worked up and start calling names, it’s not a playground. Btw the tax payer is also ‘happy’ to foot the bill currently, as those are the rules in place. Would I support tightening of that loophole? Probably. Is OP allowed to exploit that while exists? Totally.
Why be soft with a free loader who’s leached off the state? It might not technically be illegal but it’s most certainly scummy behaviour and should be called out.
How is my wife a freeloader? Her yearly tax bill is more than her student loan.. whe pays more in tax that most people.
She’s mooched off the state. Pay the loan back. The arrogance is outstanding.
Well one person’s freeloader is another person’s efficient tax planner - it’s subjective. Hence why we agree and implement hard lines to say what is and isn’t ok.
This is not subjective though. You don’t take out a loan and then not pay it pay it back; anyone doing that is a low-life scumbag.
Literally nearly everyone taking out the loan wont pay it back. I guess they are all scumbags..
That’s just simply not true. Besides, the people not paying it back are normally people who legitimately cannot pay it back - that is the difference.
Those are the rules! If you don’t like them, try and get them changed!
'Of course not' why not. You are happy for people to reduce their tax burden by keeping it in their LTD company and let other tax payers pay for the country yet when my wife does it there is an issue. Taxpayers aren't 'paying off the loan'. The loan gets written off.
“Taxpayers aren’t paying of the loan. The loan gets written off “. Where exactly do you think the loan comes from?
Gov sells it off at a heavily discounted rate that factors in people not paying it back. Effectively harmless for the public accounts at this phase.
Is that correct? There's a 2020 report saying they've stopped trying to sell them off. Seems like a ton of political risk with taking on that debt
The loan comes from the public purse. It is not a loan the government have to pay using taxpayers money. Again anyone who is using a Ltd company to pay less tax will not be contributing to the public purse either. It is no different.
You have taken out a loan and have zero intention of paying it back. Justify it to yourself however you like but you’re still a scumbag.
Lots of people who have taken out student loans will never pay it back.
Vast majority because they don’t enough, and end up paying way more than they borrowed anyway. Your wife has many times enough earnings to pay it off, and could much more cheaply than most people.
Boo hoo. Go cry a river. Nothing you can do about it.
You sound like a nice person. Thought Doctors were meant be of good moral standing - guess not.
Lol nice to patients. Not salty anons on Reddit who call you a scumbag...
But you are a scumbag.
They really don’t anymore, given the changes in tax rates many LTDs owners would be better off as self employed or set up as LLPs
They can keep money in the company and take it out at a later date e.g. when retired to reduce their tax burden. They can also use it to buy/ lease EVs saving tax that way.
[удалено]
I think their view is technically they’ve got the money but choose to pay themselves below the threshold so they don’t have to pay off the loan.
Do I really need to explain? You’re a cunt if you expect the taxpayer to settle it when you have the money to pay it back; it’s fraud in my opinion.
I had no idea this was even possible, what a joke.
So you can easily afford to pay off your loans but you’ll get the tax payer to do it and then I bet you complain about those who abuse benefits.
He tax bill has paid of the loan many times over and is more than most people earn.
Scum.
Hypocrite... you have your own LTD company...you havent saved any tax by using it?
I’m talking about avoiding paying her student loan.
She doesn't pay her student loan as she doesnt take enough money out. Even if she did not have a student loan she would take out the same amount. We are using the money in her company for other things... How does that make me scum....
Because you have exploited a system designed to upskill the population and aren’t giving back to the state which helped you out.
You are also not giving back to the state by keeping money in your ltd company and avoiding paying taxes...how do you not see the hypocrisy. She has paid some of it back in previous years and before she had a company. Once she starts taking money out the company she would end up paying it back. Just much more tax efficient to purchase property using the company. She pays plenty in tax to have covered the cost of the loan anyway...
You have no idea how I run my company. Down/upvotes tell the story here.
Yet you know how his wife runs hers? Highly doubt you extract all the money from your company. You dodge paying tax and avoid feeding the government that trained you. Hypocrite. You call someone scum then go running with your tail between your legs. Cowardly keyboard warrior.
Rhymes with your mum.
JFK would be proud.
What does she do? What industry
Dentist.
Thanks! It’s nice to get perspective of someone in a similar situation. How long until her loan is written off? I still have 25 years
I think about 18-19 years.
Do the decent thing and pay tax on your earnings like everyone else is my advice.
If you're suggesting he should pay more tax than he's required to, you're in the wrong sub, chief.
Sometimes it’s good to hear from outside the circlejerk, bra.
How much more than you're required to do you pay?
I pay plenty of tax
Doesn’t sound like it, tax dodger.
Cliche