Profit Extraction
Your business has had a great year, and you want to reward yourself by taking some profits from the business. The choice has always been bonus or dividends.
You know that if you take a bonus from your company, you will pay income tax and National Insurance on the bonus.
You know that if you take dividends, then your company will pay corporation tax on the profits, and you will pay income tax on the dividends.
So are there any alternatives?
There are alternative reward structures that can be used to reward you and other key employees in the business. These are designed to be much more tax efficient. You and your key employees could receive 88% of the profit extracted.
But beware...
There are a multitude of service providers who claim to offer tax efficient profit extraction strategies, and it is important to distinguish those strategies that are based on a true understanding of the legislation and those that are based on wishful thinking. In our view, a large number of these strategies are too risky, and will result in stress, hassle and the payment of further tax.
However, we do believe that some of the strategies are based on a proper understanding of the legislation, and indeed, some of them are less contentious than you might think.
If you would like to talk to us about tax efficient profit extraction, please call us on 01553 630310. Alternatively, please complete the attached questionnaire, and we will contact you as soon as we can.
