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Invest in stocks and shares as LTD

Posted: February 2nd, 2021, 4:25 pm
by gor1234
Hello

I am just wondering if it is possible to invest in stocks and shares through a Limited company in the UK?

If so, what would be the process?

Re: Invest in stocks and shares as LTD

Posted: February 2nd, 2021, 4:28 pm
by bluedonkey
gor1234 wrote:Hello

I am just wondering if it is possible to invest in stocks and shares through a Limited company in the UK?

If so, what would be the process?

It is possible but why would you do it?

Re: Invest in stocks and shares as LTD

Posted: February 4th, 2021, 7:50 pm
by gryffron
Yes, it's perfectly possible. Many of the well known internet brokers offer internet accounts for ltd companies

The downside is that a ltd company has no personal allowances for CGT or dividends. So they will pay corporation tax on the entire profit. And then you'll pay more tax when you take the money out of the ltd shell. Individuals have personal allowances (and ISAs and SIPPs) which means shareholdings are charged far less tax for individuals than for companies.

Also - a company which does no trade other than investing its own cash in shares would be a "close investment company" (google it) which is subject to even more tax :(

So as bluedonkey hints, there are good reasons not to.

It might be a better idea to take the money out and invest it personally. Though there are exceptions - such as if you are currently a high/very high level taxpayer and want to leave some money in the ltd company for later.

Gryff

Re: Invest in stocks and shares as LTD

Posted: February 4th, 2021, 8:07 pm
by PinkDalek
gryffron wrote:... The downside is that a ltd company has no personal allowances for CGT or dividends. So they will pay corporation tax on the entire profit.


Sorry to be picky but UK corporations do not pay Corporation Tax on UK derived dividends and, as far as I am aware, never have. Foreign dividends are a different matter but may benefit from Foreign Tax Credit Relief.

Also - a company which does no trade other than investing its own cash in shares would be a "close investment company" (google it) which is subject to even more tax :(


Similarly, at present, the rate of Corporation Tax for all UK corporations is 19%***. Historically, a "Close Investment Holding Company" (Google it ;) ) was not entitled to benefit from the Small Companies' Rate of Corporation Tax nor the old marginal relief.

There are IHT related aspects but this isn't really the place to delve into those.

PD

Edit: Except for these beasts https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/rates-and-allowances-corporation-tax#ring-fence-companies