Tax benefit from investing in shares through ltd company?

[CG91]

I'm curious to find out any tax benefits that occur if I was too purchase public shares through my own ltd company, as opposed to buying them personally.

Some key benefits i'm guessing could occur include


1. Lower payable tax = greater amount available to invest

e.g if my company made €100k profit a year, I pay 12.5% corporate tax (€88.5K remaining) and then pay myself out €70k as a salary.

€70k is then taxed at an average of lets say 40%, leaves me with €42k.

Invest €10k in shares personally, leaves me with €32k take home.

OR

Original company profit = €100k
Purchase €20k worth of shares during financial year
New profit = €80K
- 12.5% tax = €70k

Pay myself salary of €51.5K

My tax rate average would lower significantly, lets guess it brings it to 30%

Leaves me with €36k take home and €20k worth of shares

I realise my tax rates estimates are probably way off, but would the general jist be correct?


2. Writing off associate costs of share trading.

If I spend €1k a year on transaction and account fees, could some of this be recouped if I was to buy through a company?


3. Capital Gains Tax as a company? Does CGT apply to a ltd company profiting on shares? With 40% CGT this would be a huge benefit if it could be avoided.


4. Drawbacks?

Loss of cgt excemption allowance (€1270 per year) is the obvious one to me, anything else?

 

[Brendan Burgess]

There are so many flaws in your arguments and calculations, that it's hard to know where to start.

Let's start with the most glaring

Original company profit = €100k
Purchase €20k worth of shares during financial year
New profit = €80K

The purchase of shares is not a deduction for tax purposes. So your taxable profit is unchanged.

Buying an investment through a company is simply never a good idea.
You are exposing any gains to being taxed twice - once in the company as CGT and again in your own hands when you take the net gains as income or capital.

Have a read of this Key Post which should explain the basic principles

Should I buy my business premises through the company or in my own name?