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Using Excess Cash

Whichever option is chosen, a top priority is usually tax-efficiency, ideally combined with the additional benefits of security, easy access and flexibility.

USING EXCESS CASH

With excess cash available to invest, a company has a number of options to choose from, but selecting one that offers a full range of benefits can prove difficult.

Whichever option is chosen, a top priority is usually tax-efficiency, ideally combined with the additional benefits of security, easy access and flexibility.

Many companies simply hold cash on bank or building society deposits if they have no immediate plans for it, and substantial sums may build up over a number of years.

The instant access and relatively safe (but modest) returns offered by deposit accounts may be a reasonable default position, but they have become less attractive with falling interest rates and rising inflation.

Trying to balance all these factors has inspired many companies to look at other investment solutions for their liquid assets.

When considering a suitable investment, it is important to consider the company’s investment objectives and the attitude to risk of the individuals running the company. Selecting a suitable investment might not just be about tax; different investment vehicles can introduce differing levels of administration and it is important that this is not overlooked.

Guide to Company Owned Investments Download

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