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Invest Your Company’s Extra Cash

Let’s look at how UK companies can invest their extra cash, where to invest, and what risks to keep in mind if you have spare cash sitting in the bank?

Can a UK Company Invest Its Cash?

Yes – a UK limited company is allowed to invest its money.

Your company could invest in:

  • Stocks and funds
  • Property (residential or commercial)
  • Pensions for directors
  • Gold or other assets
  • High-interest savings accounts

This can be smarter than taking the money out as dividends, especially if you already earn more than £50,270 a year (the basic rate tax threshold). Taking more income after that triggers higher tax rates.

Instead, letting your company invest can save you tax and help your cash grow until you need it.

📈 Where Can You Invest Company Money?

Here are some popular options:

1️⃣ Stocks and ETFs

Your company can open a corporate trading account to invest in shares (like Apple or Tesla), index funds, or ETFs. Many brokers offer accounts for limited companies – Interactive Brokers and Invest Engine is a popular choice because it’s affordable and easy to use.

You will need a LEI number that can arranged via Invest Engine for £50 a year and that can be renewed each year provided you invest atleast £500 a year via them and keep a balance of £100 for their annual renewal fees.

2️⃣ Property

Your company can buy residential or commercial property. This provides rental income and potential long-term growth.

Keep in mind:

  • Buy-to-let mortgages are costlier for companies.
  • Lenders may require you to set up a Special Purpose Vehicle (SPV) – a company created solely to hold property.

Alternatively, your company could lend money to property developers and earn interest (usually 8–12% annually).

3️⃣ Pension Contributions

Your company can contribute to a director’s pension. These contributions aren’t taxed as corporation tax, and the pension grows tax-free. This is great for long-term wealth but remember pensions are locked until at least age 57 (from 2027). Save ~33% tax vs dividends by avoiding dividend extraction and NI charges.

4️⃣ Cryptocurrency

Your company can invest in crypto (e.g., Bitcoin or Ethereum). Some exchanges like Kraken and Gemini allow corporate accounts. This is something i personally wouldn't choose at all.

5️⃣ High-Interest Savings Accounts

If you prefer low risk, you can use business savings accounts or money market funds paying 3–5% interest. A good bank account that does pay interest is Tide.

⚠️ Risks of Company Investing

While it’s legal for a trading company to invest, there are some risks:

  1. Tax Issues – If HMRC classifies your company as an “investment company,” you may lose tax benefits like Entrepreneur’s Relief and pay higher corporation tax (25% instead of 19%).
  2. Legal Risks – If your trading and investing activities are mixed, financial trouble in one area could impact the other.
  3. Accounting Complexity – Keeping trading and investing separate makes taxes and bookkeeping easier.

🏢 Structuring Company Investments

To reduce risks, you can:

✅ Create a holding company – Set up a parent company that owns your trading company. Profits move to the holding company tax-free (as dividends), and the holding company can invest in assets or other businesses.

✅ Set up a separate investment company – Your trading company loans money to this new entity under normal commercial terms. The loaned money can then be invested. This loan needs to be repaid back by 9 months else we will need to pay 33 % interest.

Because we can invest in shares and bonds, we can select the following SIC code

64991 – Security dealing on own account

If you want to invest in property and want a company mortage , set up a special property vehicle (SPV) by opening another company that only invests in property. We can select the following SIC code

68100 – Buying and selling of own real estate

💡 Is It Worth Investing Your Company’s Cash?

Yes – in many cases, investing company cash beats taking extra dividends.

For example, if you leave £60,000 in your company each year and invest it, you could save over £250,000 in taxes over 10 years (compared to taking it as dividends and investing personally).

Final Thoughts

Whether it’s stocks, property, or pensions, there are many options – but it’s important to separate trading and investing activities for tax efficiency and legal protection.

Focus on:

  • Making bigger lump-sum trades to reduce FX and dealing fees.
  • Holding stocks long-term to minimize trading costs.
  • Using employer contributions to maximise tax efficiency.