Corporate Investment Account

Corporate Investment

What is it?

Just as an individual might choose to invest surplus money in order to generate better long-term returns than are available from cash deposits, a business that chooses not to distribute all of its profits might also wish to try to earn more than its bank is offering it on that money, particularly if the cash is likely to be held within the company for many years*. With rising inflation, generating a better return on cash reserves has rarely been more important.

One option that we explore with owners is investing some of the cash they hold into collective investments using a Corporate Investment Account. This can potentially increase the income and/or capital available to the business and help the company reserves maintain their real value. This option of course carries more risk than leaving cash on deposit, and any decision to invest will be made after a full discussion about your attitude to risk and capacity for loss.

The taxation of the investment return depends upon the way the company prepares its accounts. For most companies, income and gains are accounted for annually and are subject to corporation tax, although micro-entities are permitted to defer tax on gains until the eventual encashment of an investment.

In all cases, we ensure that any option considered is suitable for you and your company and that you fully understand the advantages and disadvantages before proceeding.

*It is worth noting that excess cash or investments held within a company can impact Business Relief although investments are not treated any differently from cash in this regard.