Corporate investments
(making the most out of corporate capital)
Many companies understand the principles and benefits of
providing tax-efficient pension and protection assurances
for themselves and their employees.
How many companies prudently invest any surplus capital
for their own benefit?
When a company is creating cash that is not being reinvested, it usually ends
up in a deposit account. Companies should be concerned with returns on this
spare capital. In a deposit account, investments are highly taxed and yields
are low.
The answer, when a company requires investment over the
medium to long-term, is to set up an offshore investment
strategy. Any gains made are free of both UK and local taxes
(with the exception of some countries, which withhold the
tax deducted at source on local dividends).
5% withdrawals
The company can make withdrawals of up to 5% per annum of
the original investment (deemed to be 'return of capital')
without liability to tax. These withdrawals can be held over,
for example, from a 10-year investment in which no income
is taken, 50% can be withdrawn tax-free.
Taxation
As this investment strategy will not produce an income (as
it is deemed to be a 'return of capital'), there is no tax
to pay. A tax liability will occur only when there is a 'chargeable
event', for example, when it is surrendered or on withdrawals
in excess of the 5% limit per year. The company can use withdrawals
to fund pension contributions, which are deductible for tax
purposes. Trading losses may be offset against income withdrawals
in excess of the 5% limit.
Investment
You can choose from a wide range of investments to suit
the company’s attitude to risk. This strategy is a
medium to long-term commitment. Clients should bear in mind
that investments are not guaranteed and their value can go
down as well as up.
Full details of individual schemes and how they may help your company are available
through Pall Mall Financial Independence.
If you would like further information, please feel free
to call us on 0207 407 8787 or simply complete the form below:
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