As the tax year 18/19 gives way to 19/20, let's briefly recap and explore the potential optimal profit extraction strategies pertaining to company owner-managers.
Potential available allowances:
Review salary before the year-end to ensure is not more than the tax efficient limit.
Consider appointing your spouse or civil partner as director before the year-end to utilise (if
available) all of their Personal-allowances as salary.
Consider declaring an interim dividend before 05-April each year to make use of available allowance.
Charge interest to a loan made to your company to enable profit extraction, it's not earning, so it's exempt from NI, and deductible from CT if it does not exceed commercial rates.
If you are not an owner-manager, you can dispose of assets that trigger income gains to make the most of their income tax allowances.
Prepare up to date management accounts to ensure proposed dividend don't exceed available profit. i.e. ensure there are enough retained earnings to allow for dividend distribution.
To profit from the single-tier state pension, you need 35 qualifying years. Paying a salary of £702 or £719 per month will ensure you don't miss out.
If you are not an owner-managers; consider disposal of assets that trigger incomes gains to make use of your allowance.
Contact us to review you personal situation