News & Views

Prudential: Extracting Profits from a limited company in the most efficient way

Technical update for Financial Advisers and Paraplanners

31 Jan 2020

Prudential: Extracting Profits from a limited company in the most efficient way

Robert owns a limited company and reviews his remuneration at the end of his reporting period, 31 March each year. He usually takes a combination of low salary and high dividends. The business has generated £100,000 of profit for the year and Robert uses the remuneration taken out in December to pay his bills etc for the next calendar year.

He does not see the value in pensions, but knows that there will be no value left in his company when he retires. This is because he runs a personal services company, but does not have any issues with the IR35 rules. So all the value of the business sits with him. For this reason he has always extracted the full profits out of his company each year using a low salary/high dividend structure. He usually takes £10,000 in salary, with the remainder paid out as dividends.

He is seeking advice to review his remuneration structure, to see if this is still the best thing to do.

Mark Devlin, Senior Technical Manager at Prudential goes into more detail here.

Email this article Print Share on Twitter Share on LinkedIn Share on Facebook Share on Google+


Not yet registered?

Please complete this form to join our community

Select your role:
Confirm Password

Visit the Prudential sponsor area

Read more Prudential articles and find out more about their Tools & Resources here..

Join the Panacea community

Join the Panacea community for free and recieve news, guides, whitepapers, event information, special offers and more!