Hey all
I need to extract a large sum from my company but am wondering how to do this in the most tax efficient manner. The sums involved are in the region of £50k.
I see 3 main options:-
1. Salary/bonus is worst case, attracting highest rate of tax.
2. As for dividends - my wife and I are 50/50 shareholders and we are both already maxxed out to the 40% tax threshold. So any further dividends will attract the additional tax as expected.
2. Loan. Now, my plans for next year involve closing the company, as per some of my previous posts on CUK. So I was thinking, could I take a loan, for a term of around a year, and pay interest to my company on that loan (say 5% APR). And then when the company is liquidated, repay the loan back then with the funds from liquidation?
The loan route - if feasible - would be more efficient because liquidation will mean a lower tax burden, even when accounting for the 5% interest I would pay on the loan.
I will of course be discussing with my accountant, but wanted to get some real-life knowledge here too.
The main foreseeable problem is what happens if I don't liquidate the company for whatever reason; in this case I accept that I would eventually have to pay a dividend to pay off the loan (and hence pay tax anyway).
Are there any holes in my 'loan' option? Or are there any options I haven't thought of?
I need to extract a large sum from my company but am wondering how to do this in the most tax efficient manner. The sums involved are in the region of £50k.
I see 3 main options:-
1. Salary/bonus is worst case, attracting highest rate of tax.
2. As for dividends - my wife and I are 50/50 shareholders and we are both already maxxed out to the 40% tax threshold. So any further dividends will attract the additional tax as expected.
2. Loan. Now, my plans for next year involve closing the company, as per some of my previous posts on CUK. So I was thinking, could I take a loan, for a term of around a year, and pay interest to my company on that loan (say 5% APR). And then when the company is liquidated, repay the loan back then with the funds from liquidation?
The loan route - if feasible - would be more efficient because liquidation will mean a lower tax burden, even when accounting for the 5% interest I would pay on the loan.
I will of course be discussing with my accountant, but wanted to get some real-life knowledge here too.
The main foreseeable problem is what happens if I don't liquidate the company for whatever reason; in this case I accept that I would eventually have to pay a dividend to pay off the loan (and hence pay tax anyway).
Are there any holes in my 'loan' option? Or are there any options I haven't thought of?
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