Share dealing with company funds

[Simon Baker]

My partner and I have funds that we wish to invest in uk shares using our own stockpicking ideas. Is there a tax efficient way of investing, assuming we make a profit?

[hashman]

Why does your question refer to 'company funds' ?

[Simon Baker]

Yes, the funds are company funds held in our money manager account. My business partner and I are 50/50 shareholders. Sorry for not making this clear first time around.

[hashman]

Generally speaking it would be better to carry on this activity as individuals. Reasons are -

1. Availability of taper relief (doesn't apply to companies)
2. Availability of annual exemption (doesn't apply to companies)
3. If the sharedealing side of the business becomes 'substantial' i.e. more than 20% of the total, then this could have an adverse effect on the business taper relief in respect of your shares in your joint company.

On the other hand -
4. Dividends received from other UK companies are not liable to Corporation Tax
5. Tax rate might be lower (but you have to consider the additional cost of getting the money into your hands)
6. From an IHT point of view it could make sense - if your company shares will qualify for 100% Business Property Relief - provided the share dealing activity does not become too big (broadly speaking, more than 50% of the total).