Cash on deposit is quietly losing value.
Surplus profit left in the corporate bank account erodes against inflation while sitting outside FSCS protection above £85,000. A proper corporate investment policy puts that cash to work — without compromising the working capital the business needs.
Most profitable businesses sit on more cash than they realise.
Years of retained profit, dividends not yet drawn, war chest for the next acquisition that hasn’t come. It accumulates in the operating account because that’s the path of least resistance — and it earns 1–3% while inflation runs at 3–5%.
Corporate investment isn’t about speculating with company money. It’s about splitting the balance into operational cash (kept liquid), tactical reserves (held in cash but spread across providers for FSCS), and long-term surplus (invested across a diversified portfolio sized to the company’s genuine time horizon).
Done well, it preserves real value, keeps liquidity where it needs to be, and works alongside director pension contributions to extract value tax-efficiently when the right moment comes.
The cost of leaving it in cash.
Inflation never sends an invoice — but it’s the most consistent drag on the corporate balance sheet there is.
With a proper corporate policy
- Working capital ringfenced, surplus identified and quantified
- Cash spread across multiple banks for FSCS coverage on tactical reserves
- Long-term surplus invested across a diversified portfolio
- Time horizon and risk matched to the company’s actual cash needs
- Coordinated with pension contributions for tax-efficient extraction
- Annual review to capture changes in business cycle and surplus position
Without one
- All cash sitting in one operating account, far above the FSCS limit
- Real value eroding against inflation, quarter after quarter
- BADR/Business Asset Disposal Relief at risk because of non-trading status
- No clear line between operational and surplus cash
- Tactical investments made impulsively when something comes up
- Director left with all the upside and downside personally on dividend income
Strategy, not product pushing.
A four-step process that’s the same for every client — though the conclusions never are.
Understand the business
Cash position, seasonality, working capital needs, acquisition plans — and what genuinely qualifies as surplus.
Design the policy
How much liquid, how much tactical, how much long-term. Risk and time horizon matched to the business cash cycle.
Put it in place
Right accounts opened, right platform for the investable portion, FSCS protection mapped out. Board minutes for the policy where helpful.
Keep it relevant
Annual review of the policy against actual cash levels, business plans, and any tax or relief considerations.
Things people often ask.
How much should I invest from the company?
It comes down to the cash you genuinely don’t need for operations or near-term plans — usually 6–24 months of working capital reserves stay in cash, with anything above that available to consider for longer-term investment.
Will it affect Business Asset Disposal Relief on exit?
Potentially yes — if the company holds too much in non-trading assets (like an investment portfolio) it can lose its trading status and the relief. That’s why the proportion and structure matters, and why coordinating with exit plans matters.
How is corporate investment taxed?
Investment growth inside the company is subject to corporation tax. Dividends from UK shares are usually tax-free in the company. Capital gains follow corporation tax rates. It’s usually less efficient than pension contributions on a pound-for-pound basis — which is why both are often used together.
Is FSCS protection enough?
FSCS covers £85,000 per banking group per company — meaningful for small reserves, irrelevant once you have hundreds of thousands sitting somewhere. Spreading across multiple groups, or holding in different asset types, becomes the way to manage that risk.
What about treasury management products?
Money market funds and short-term deposit ladders have a role for tactical reserves — they preserve liquidity and chase yield without taking on equity risk. They’re part of the policy, not the whole answer.
Should I just draw the cash out and invest personally?
Sometimes — especially via pension contributions. But drawing cash out as dividend triggers personal tax, and not everyone has the ISA/pension headroom to absorb it efficiently. A blended strategy is usually most efficient.
Let’s start with a conversation.
An initial review is without obligation. The first conversation often surfaces six- or seven-figure cash positions that have never been actively managed.