about banner

Extracting profits from a small, limited company
01/07/2024

It is pretty much universally accepted that shareholders (usually directors) of small companies take out their remuneration as a small salary – a salary pitched high enough to secure NIC benefits but not high enough to that employee NIC contributions are payable – and any balance as dividends.

Unless directors have the need for remuneration in excess of the current basic rate Income Tax band (set at £50,270 for 2024-25) then salary plus dividends should be set at a level that does not exceed this limit.

But there are other ways that director/shareholders can extract profits from their company. For example, interest can be paid to directors if they have credit balances on loans made to their companies. In some cases, this interest will be covered by the Personal Savings Allowance.

Directors can also choose to leave accumulated profits and cash balances inside their companies and build up these reserves as rainy day funds. Dividends can be taken from accumulated reserves (after corporation tax has been paid) even if the company has ceased trading.

If you would like to revisit your present strategy for extracting profits, or your longer term exit planning from your business, please call so we can consider your options.


Legal

Cameron Baum Hollander is the trading name of Cameron Baum Hollander Limited. Cameron Baum Hollander Limited is a limited liability company.

Company Number: 04631085

Registered Office: 88 Crawford Street, London, W1H 2EJ

ICAEW Number: C001006629

VAT Number: 814 8108 39

Read More..

Membership

 icawealigned

 

Contact Us

Cameron Baum Hollander
88 Crawford Street
London
W1H 2EJ
partners@cbh.co.uk
020 7724 8824
https://cbh.co.uk/

JUMP TO TOP
We use cookies

We use cookies on our website. Some of them are essential for the operation of the site, while others help us to improve this site and the user experience (tracking cookies). You can decide for yourself whether you want to allow cookies or not. Please note that if you reject them, you may not be able to use all the functionalities of the site.