Cash pooling ― overview

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

This guidance note provides an introduction to the cash management technique known as cash pooling.

What is cash pooling?

Cash pooling is the generic term for one of the most fundamental and popular cash management techniques and is an integral part of liquidity / working capital management. Companies also operate cash pooling in order to optimise interest paid to them. The bank has regard to the aggregated balance of all the accounts in the pool when calculating the interest payable (or receivable) by the group.

Cash pooling means that companies combine their debit and credit positions on multiple bank accounts into a single amount. It may be undertaken manually or, more commonly, with the help of automated banking products.

Banks are able to offer cash management tools with increasing ease due to the standardisation of cross-border clearing and payment systems. Many banks have developed a range of specific cash pooling products to help treasurers manage cash more effectively in this way.

A number of potential tax issues need to be considered when setting up a cash pooling

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Owner-Managed Businesses

Trade or hobby

Trade or hobbyInteraction of hobby farming rules and commercialityFarming has its own set of ‘hobby farming rules’, which historically have stated that a profit must be made every six years. This is known as ‘the five-year rule’, in that there can be five years of losses but there must be a profit

14 Jul 2020 13:50 | Produced by Tolley Read more

Personal Tax

Self assessment ― amendments and corrections

Self assessment ― amendments and correctionsOnce a self assessment tax return has been filed, both HMRC and the taxpayer (or the agent) has the right to make changes to the return. There are different time limits depending on whether it is a correction by HMRC or an amendment made by the

14 Jul 2020 13:37 | Produced by Tolley Read more

Employment Tax

Fuel-related payments / mileage payments

Fuel-related payments / mileage paymentsIntroductionMost employers will make payments to employees in relation to business travel. Among the most common payments in relation to business travel are fuel and mileage payments. If an employer does not reimburse these amounts, then the employee will be

14 Jul 2020 11:46 | Produced by Tolley in association with Philip Rutherford Read more

��˾��ҹ��