Can a Limited Company buy shares in plc's?

Hi,

I have a limited company which owns shares in another limited company and recieves the dividends. That's all it does. Those dividends then build up. I aim to take as much out annually to the amount I can tax free and leave the rest in.

Can I buy shares with this left over money from within the Limited Company?

Possible advantage, is that if remove too much money from the limited company to then buy shares in my own name i have to pay tax on the dividends.

Disadvantage would be i could buy shares from within the limited company, if I made a profit on the sale of the shares i would have to pay CGT.

Any other advantages/disadvantages?

If I leave the money in a bank account I will be getting zero interest.

I don't expect to make much money, but may at least get a few dividends. Any capital gains would be fairly minimal, especially in comparison to the dividends recieved from the other limited company.

Thanks in advance!

Regards
Excel35

Simple answer is Yes!!!

Thanks Truemanbrown

Anyone else care to elaborate? Any further insights, things I should take into consideration? Best way to do it, tax implications etc?

Thankyou in advance!

excel35

Yep - sounds like a good idea

Yes - essentially this is using the Retained Earnings in your company to invest in additional assets.

Correct - not only that, you'll be taxed on the amount you extract from the company to pay for those extra shares!

You'd have to pay capital gains anyway I believe (in your own name or your company name).

Have you thought about investing in some foreign companies? or foreign cash? You wouldnt receive any imputation credits (although you should receive extra in the payout) and foreign countries can offer a good interest rate. And, provided you hedge the transactions correctly, you could make good money on the exchange fluxuation.

Best of luck.