Remuneration planning

Tax-efficient profit extraction

With constant changes to tax legislation, it is important to seek professional advice when considering how to extract money from a business.

At MGI Midgley Snelling LLP, we can advise on tax-efficient strategies for extracting profit from limited companies, as well as the timing of bonus payments to maximise cash flow.

Our planning services take account of the amount that is available to be paid out, ensuring that the required working capital is retained. Once this has been determined, we assess the specific circumstances of the individual and their business, to determine the most efficient extraction method.

The most common ways for shareholders and directors to reward themselves are salaries/bonuses and dividends. Dividends are usually more tax-efficient than salaries, even in the case of companies paying the highest rate of corporation tax.

However, a reduced salary may affect pension payments and the level of borrowing that can be obtained, for example, for a mortgage, as some lenders do not count dividends as income.

If you would like to know more about how we can help with remuneration planning, please contact us.

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