Ltd Co - Extract Profit Tax-Free
Updated: Feb 5
There are several ways to extract money from your company which with a little investment of time throughout the year, can bring your tax bill down drastically. Here we will explore the easiest ways and the tax implications to you.
1. Salary - If you have no other income, extracting £9500 per year will be tax and NI free for you, but it will create a small NI Liability for the company of £98.26. This will save the company £1805 in corporation tax, leaving you £1,706.24 up.
2. Mileage Claims - Keep those records, they add up. 10,000 miles per year reduces your CT Liability by £900, and it is £4500 tax-free to you personally. That's a win-win!
3. Dividends - This isn't as generous as it used to be, but the 1st £2000 of Dividends are tax-free to you. Why not get your Spouse or Parents to invest and set up another class of Share so they can benefit too? Unfortunately, Dividends are paid after corporation tax, so any drawings are from taxed profits within the company. Corporation tax is 19%.
4. Personal Pension - You can have the company pay into your pension, and you will get the uplift in pension basic relief too. A £1000 contribution will save £190 in Corporation Tax, and uplifts to £1250 once the Government adds 20%. That is just over a 54% increase in your cash if you are a director.
Come and talk to us for you would like any more information or have any questions.
01784 390021 - 07481 479933