There are two primary use cases for InvestEngine’s Business Accounts. These are:
- Utilising your VAT and Corporation Tax. Business owners typically put tax money aside ahead of time, ready to pay when the time comes. VAT is typically paid once a quarter, while corporation tax is typically paid once a year.
During these periods, this money is idle and business bank accounts pay little interest. Instead, you can put the money to work in a low-risk Money Market Fund or Bond ETF, for example, and aim for returns on investments.
- Long-term investments for business owners. Rather than paying out business profits in the form of dividends – and being subject to dividend tax – business owners can invest business profits pre-tax and use the investments later in their life.
Situations will differ from person to person but many people have little income after retirement, so their dividends will most likely be taxed at a different (often lower) rate.
This FAQ entry is for informational purposes only and is not intended to constitute or be relied upon as investment, tax or accounting advice. If you are unsure about how to proceed, you should seek independent advice before entering into any transactions.