Small business owner? Sick of constantly topping up the tax mans coffers? There are ways of extracting your profits tax efficiently.
The most obvious is using a pension. Whether or not you are a sole trader, partnership, LLP or Limited Company you get tax relief on any contributions to your pension. If a sole trader, partnership or LLP this is at your highest marginal rate meaning you could save up to 45%! Where you are limited your company makes an “employee contribution” and receives corporation tax relief (smaller companies rate is 19%).
Obviously the normal pension rules apply so getting your money back out is restricted in that you are restricted until at least age 55 and 25% is tax free with the remainder taxable income. Do the maths though and you will see how effective a strategy this can be!
A second simple solution may be to incorporate your business. Simply put if you are a sole trader, partnership or LLP you can apply to be a limited company. The savings come from paying no national insurance on profits and instead withdrawing your profits in the shape of income (within your personal allowance) plus dividends.
At Financial Fortress, we work with other experts including those in accountancy so work with your trusted advisers to tailor the perfect solution for you. Where you don’t already have an accountant, we will recommend local firms with excellent track records and experience getting it right!
What you get with Financial Fortress
Authorised and Regulated by the Financial Conduct Authority.
No cost or obligation initial review meeting.
A personally named and dedicated expert dedicated to you!