We explain taking money out of your company in plain English, handle it correctly, and make sure you claim every relief you are entitled to, all at a fixed fee.
Taking Money Out of Your Company
Getting money out of your limited company tax-efficiently means combining a modest salary, dividends, pension contributions and expenses in the right proportions, rather than simply drawing what you need.
We set the most efficient mix of salary and dividends for your situation, use pension contributions and legitimate expenses, and plan your extraction across the year so you keep as much of your company's profit as the rules allow.
The efficient approach is usually a salary at the National Insurance-optimal level plus dividends, topped up with employer pension contributions, but the ideal mix depends on your profit and other income, which is why it is worth modelling.
The Detail That Matters
Getting money out of a limited company is not just about drawing what you need: the mix of salary, dividends, pension and expenses decides how much tax you and the company pay. The right blend depends on your profit and other income, and it is worth modelling each year.
A small salary is usually the efficient first layer: set around the point that preserves your state pension record while keeping employer National Insurance low, and often covered by the Employment Allowance where a company qualifies. The salary is also deductible against Corporation Tax.
Dividends are paid from post-tax profits and taxed at 8.75%, 33.75% and 39.35% across the basic, higher and additional bands, after a £500 dividend allowance. They carry no National Insurance, which is why a salary-plus-dividends mix usually beats a large salary alone.
Employer pension contributions are deductible for the company and are not taxed as your income when paid in, so profit can be extracted into your pension with no Income Tax, dividend tax or National Insurance at all, within your annual allowance. For many directors this is the single biggest saving available.
Legitimate expenses, a company electric car (taxed at a very low benefit-in-kind rate), mobile phones, and trivial benefits all extract value efficiently. Timing dividends across tax years, and using a spouse's shareholding and bands where they genuinely work in the business, can lower the overall rate further.
The common mistake is drawing dividends up to the higher-rate threshold every year out of habit, when diverting some profit into a pension, or across two tax years, would extract the same value at a much lower rate.
Key Figures
How We Help
We set a tax-efficient salary and dividend combination for your profit and other income, the foundation of efficient extraction.
Employer pension contributions are a highly efficient way to extract profit, tax-deductible for the company and building your retirement fund.
We make sure every legitimate expense and efficient benefit, such as an electric car, is used, so you extract value at the lowest tax cost.
All the forms, calculations and correspondence handled on your behalf, so you never have to decode HMRC's rules or sit on hold.
A clear fixed fee quoted after a free call, your position explained in plain English, and never a surprise bill.
We act quickly, and where earlier years are involved we put those right too, reclaiming refunds or minimising penalties.
Directors often draw money without planning the mix, overpaying tax or overdrawing their loan account. Planning salary, dividends, pensions and expenses together is where the saving is, and we do it for you.
Recent Client Outcome
A director was taking a £12,570 salary plus £50,270 of dividends every year, pushing into higher-rate dividend tax, and had no pension provision.
What we did. We kept the efficient salary, reduced dividends to stay within the basic-rate band, and had the company make a £20,000 employer pension contribution instead of paying the equivalent as higher-rate dividends. We also moved them into an electric company car.
The outcome. The pension contribution avoided the 33.75% higher-rate dividend tax that slice would have suffered, saving around £6,750 a year, was fully deductible for the company, and built retirement savings, while the electric car added a further low-tax benefit.
The same amount of value left the company, but a far larger share reached the director rather than HMRC.
Why People Come to Us
Questions Answered
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