What is the best way to take money out from the company bank account?

[kesm]

Hi all,

At the moment I always take the minimum amount of dividends -28k I believe- and agreed salary per year -around 10k salary-. Which means that every year I am left with a substantial amount of money in my company bank account. What is the best tax efficient way to take more money out every year?

Thanks very much

[TykeMerc]

That's a matter best answered by your accountant.

[Clare@InTouch]

What you're doing is usually the most tax efficient option, assuming you're a UK resident taxpayer with no other income and you're outside IR35.

Money saves in the company can be paid into to your personal pension up to certain limits, and then withdrawn at a much lower tax rate when you close provided you're entitled to Entrepreneurs Relief.

[TheFaQQer]

At the moment I always take the minimum amount of dividends -28k I believe- and agreed salary per year -around 10k salary-. Which means that every year I am left with a substantial amount of money in my company bank account. What is the best tax efficient way to take more money out every year?

If you believe in such things, then whacking cash into a pension is worthwhile - that would also help if you were ever found to be inside IR35 as well.

You could take a director's loan of £10k and repay it before interest and tax become due, and invest that.

Failing that, it's down to shutting down and claiming entrepreneur's relief, but that only works if you plan on stopping for a while.

[Eirikur]

If you have a spouse make her/him shareholder and you can share the dividends

[TheFaQQer]

If you have a spouse make her/him shareholder and you can share the dividends

kesm has a boyfriend, so not really an option (without lots of careful thought and planning, before TCP comes along)

[northernladuk]

If you have a spouse make her/him shareholder and you can share the dividends

There is absolutely not business justification from this and is purely for quick tax advantage so will be an utter minefield. (Won't say a silly thing to do as TCP will probably be here shortly)

[Eirikur]

There is absolutely not business justification from this and is purely for quick tax advantage so will be an utter minefield. (Won't say a silly thing to do as TCP will probably be here shortly)

I've done this on my accountants advise. (one of the biggest contractor accountants also posting on this forum)

[Clare@InTouch]

I've done this on my accountants advise. (one of the biggest contractor accountants also posting on this forum)

There is no problem at all in gifting shares to your spouse and sharing dividends, provided you are married when the transfer takes place and the shares hold full voting rights (so are not purely a right to income).

If you're not married when you gift the shares or they are non-voting shares, you have a massive problem should HMRC come looking.

[Martin at NixonWilliams]

There is no problem at all in gifting shares to your spouse and sharing dividends, provided you are married when the transfer takes place and the shares hold full voting rights (so are not purely a right to income).

There is also the requirement to be living together for the spouses exemption to apply - I recently dealt with somebody who decided to transfer the shares before coming to us but it turned out they were living apart.

I would also suggest all rights are equal, not just voting rights and rights to dividends - rights to assets on winding up being an important one to consider.