The 3 key methods of taking the money from your company are: salary, dividends and pension contributions.
Having a combination of all three will usually provide you with a tax efficient strategy.
There are other methods too, such as paying for mobile phones, paying interest on director loans, providing equipment or a vehicle.
It’s important not to dip into the company funds. If you do, then this creates a problem, and we have to unravel the payments. For instance you can only pay dividends up to the extent of the company profits or reserves.
You could also leave the money in the company and take the proceeds when you sell the business.
Despite changes to national insurance, in most instances the most tax efficient salary is to take the full £12,570. This is despite the reduction in the employer NI threshold from £9,100 to £5,000. There is tax relief on this cost though.
Then top up with dividends but keep within the basic rate tax band.
Having employees could help, as you will then benefit from the employer's allowance. This has increased from £5,000 to £10,500.
Could you employ a family member in your company?
Ensure that they have a job description, genuinely work in your business and they are paid, in accordance with NMW etc.
having an employee will then entitle you to the employer's allowance.
Every case is different and the right strategy needs to be tailored to your individual needs. There is a lot more detail upon request.
