Company funds in a personal bank account

The interest rate for personal bank accounts are often much better than for company bank accounts.  We are often asked if it is possible to temporarily place company funds on deposit in a personal bank account in order to earn a greater return.  This would avoid legally extracting the funds from the company and having to pay personal tax on the amounts transferred into a personal bank account.

This ‘best of both worlds’ can theoretically be achieved if the funds are held by the individual on trust for the company.  However, you would need a formal trust deed in place documenting the situation and which gives the company a legal right to the funds.  Also, you would need to advise the bank that the funds are legally owned by the company in which case we understand that the bank would then offer reduced rates of interest as it would be viewed as a business account rather than a personal account.

So, it is possible but unlikely to be worthwhile if done properly!