Business Advice Berkshire

Business Advice Berkshire – Can a Business have too Much Cash !

For most business owners cash is king, it is the lubricant for the engine of business.

Having lots of cash is the aim of a business, however, having too much cash can be problematical.

The cash in the business is clearly an asset but if there is no earmarked use of the cash, then this may impact :-

business property relief for inheritance tax,

entrepreneurs’ relief for capital gains tax.

So, although the cash accumulated may give you a feel good feeling now, it may not if it is regarded as an excepted asset.

Cash reserves

Some businesses like to retain a high level of cash in case there is an economic downturn or uncertainty (like now).

Unless there is evidence showing the cash is being held for a specific identifiable future purpose, it is likely to be treated as an excepted asset.

Like any major factor with running a business, it is best to evidence your reasons in your Director Board Minutes.

Worth a discussion?

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