As an owner-manager, your chief concern will be making your business profitable and building up cash reserves in the company. But you’ll also want to be able to extract funds from the business too – whether this is via a regular monthly salary, or ad-hoc dividend payments.
Salary vs dividends is the most common split, but there are a number of different ways of extracting funds from your business, all of which can have different tax and capital impacts – both for you personally and for the company as a whole.
Because of this, it’s important to have a clear and workable remuneration strategy – which clearly sets out
Once your business is financially stable, you’ll no doubt have thought about how to take income from the company, particularly how to split income between salary and dividends.
So, what are the main considerations when creating a remuneration strategy?:
In most cases, there’s no shortcut to crunching the numbers when it comes to creating a robust remuneration strategy. It requires an excellent understanding of both company and personal tax, and a good knowledge of the complex (and sometimes opposing) effects that company and personal taxes can have on each other.
We’ll help you to review your business and private wealth situations and generate a remuneration strategy that’s tax-efficient, straightforward and well-suited to your cash needs.
Get in touch to talk through your remuneration plans.
When to register for VAT You must register if: your total VAT taxable turnover for the last 12 months was over £85,000 (the VAT threshold) you expect your turnover to go over £85,000 in the next 30 days You must also register (regardless of VAT taxable turnover) if all of the following are true: you’re based outside the UK your business
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Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC). The deductions count as advance payments towards the subcontractor’s tax and National Insurance. Contractors must register for the scheme. Subcontractors do not have to register, but deductions are taken from their payments at a higher rate
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