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Where Taxpayers and Advisers Meet

Retirement/personal investment company vs trading company

mickael28
Posts: 24
Joined: Tue Jul 03, 2012 8:38 pm

Retirement/personal investment company vs trading company

Postby mickael28 » Sun May 18, 2014 11:44 pm

Hello,

I'm a contractor working through a ltd company and with some surplus in the company that was thinking about investing. First, I was thinking about investing directly through the limited trading company, but after reading about it, it seems that some accountants suggest to create a different company, that they call retirement company or personal investment company, and invest from there instead, e.g:

http://www.plusaccounting.co.uk/blog-po ... -companies
http://www.bakertilly.co.uk/publication ... anies.aspx
with usages of such companies as:
* The profits which are made by the trading company can be lent to the PIC for investment purposes. This means that the investment company can be used to fund retirement and the trading company can concentrate on its trading activities.
* Personal investment companies can be used in a variety of practical situations, not driven by tax rates, such as:
* cash extraction from trading companies;
or:
http://www.intouchaccounting.com/wp-con ... uscash.pdf
Retirement company- a separate company as your investment fund
Some contractors create a separate retirement company, distribute dividends to that company and invest those
funds for the future...
The money can then be invested in a range of ways, selected by the contractor in order to generate either income
or gains...
This constitutes an interesting alternative to formal pension contributions.
I had a couple of doubts, mainly:
1. What is the advantadge of using a new and separate investment company rather than just investing directly from the current trading company?
2. Anyone knows the implications of that new investment company from an IHT point of view? ie, how could shares in that company be passed onto your children in the future?

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