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Q: From my limited companies funds, I would like to invest in a property overseas. This would form part of my pension over the next 10 to 15 years. I am seeking advice on the most tax efficient way to manage this while being totally legal. Can I take funds directly from my company bank account and buy the property through the company name? Or declare a dividend and purchase it privately? Is there some other method?

Feb 20 2007

Answered by: Clive Lewis Ask a question

Basically there are only a few ways for an individual to get money out of a limited company in which they are shareholders – by a salary subject to PAYE and NIC contributions, a dividend which is deemed tax paid and which might be subject to further taxation in the individuals hands and by repayment of a directors loan account which is in credit. The other possibility is for the company to contribute to a pension scheme which might be a Self Invested Pension scheme (SIPP). These require prior approval from H M Revenue and Customs and there are some restrictions on investments and borrowings.

The rules regarding SIPPs have become more flexible since the 6th April 2006. There are rules regarding the contribution limits into registered (tax approved) scheme. But you need to take advice from an adviser registered with the Financial Services Authority (FSA) or under a Designated Professional body. Try your current adviser / accountant first and if they are not in a position to advise you regarding setting up a SIPP (or other type of pension scheme) go on the FSA website to find an adviser. Click here.

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