Assume that I have a day job that already pushes me into the higher tax bracket.
I also have a Ltd Co which currently generates approx £70k profit p/a. I expect thsi to rise by as much as 2-4x over the next 2-3 years.
Long-term I plan to give up my day job and to run the business full time, but at the moment, aside from maxing out my pension contributions it's just not tax efficient to draw any dividends from the company other than the £5k tax free allowance, as anything I do take is going to get taxed at £32.5%, correct?
Is there any logic in investing any current cash surpluses into income generating investments, so when I do come to work full time for the business I'll be able to take the income generated from these investments more tax efficiently, and also it'll help to create an additional stable revenue stream from within the business.
Is this a dumb idea? Are there any other options that I should be considering?
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- 8 years ago
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