As we finally arrive in British summertime, many of you might be starting to look forward to your summer holiday.
After a long and miserable winter, a few weeks in the sun is exactly what you need to recharge the batteries, but wouldn’t it be nice if you could escape to the sun more often?
For many people, owning a holiday home abroad is no more than a pipe dream, but if you’re a limited company owner, with a significant cash sum in your company sitting in an account earning a paltry rate of interest, then there are a number of ways you could actually achieve this.
The most obvious option to pay for a holiday home would be to simply draw dividends from your company, however this would likely incur a high rate of income tax charges of up to 45% on the money withdrawn.
A smarter and more tax-efficient alternative would be to use your company to purchase and own a holiday home in the sun as an investment, which you could then use whenever you wanted.
Aside from helping you to avoid a sizeable personal tax bill, the company purchase option also has another advantage in that the running costs of the property can also be classed as a legitimate business expense.
There are a few pre-requisites to taking full advantage of the holiday home tax concession. Rules dictate that this can only be applied to holiday homes owned outside of the UK and in order to benefit from this, you must also be seen to be offering your employees the use of the property as well. You might also need to buy back the property from the business when you decide to eventually retire.
If you would like any further information, or for financial advice on planning for retirement call Stephen and his team today on 0191 285 1555 or visit www.explorewealth.co.uk
