Running a limited company gives directors several ways of taking income, but the most tax-efficient combination will depend on individual circumstances.
Salary and dividends are often the starting point, but pension contributions, benefits, existing income and the company’s available profits also need to be considered. Taking additional dividends simply because cash is available can sometimes result in an unnecessarily high personal tax bill.
Good planning should therefore take place before money is withdrawn from the company. At First4Accounting we look at the director’s personal tax position alongside the company’s accounts and Corporation Tax position, helping clients understand the options before making decisions.
Tax planning should not be about complicated schemes. Often the greatest savings come from understanding the figures, planning ahead and making sensible use of the legitimate allowances and reliefs available.