It’s not what you earn it’s what you keep.....

Old saying but very true!!

If you are an owner (shareholder) and manger (director) of your business you can pay yourself a dividend from your profits – it is a very tax efficient way of extracting cash from your business.

Dividends are only taxed when they are paid to you personally and, as a director, you have some control over when you pay those dividends.

Therefore, you can manage the timing, and the amount, of your personal tax liabilities.

Delaying taking profits from the company in the form of dividends from one year to the next can be beneficial if your income levels drop.

Throughout the year it is worth thinking about the total level of dividends you are taking. If, after allowing for pension contributions, you are likely to exceed the higher rate tax threshold then, providing you can afford it personally, you could consider delaying taking any more dividends from the company in the current tax year i.e. until after 5th April.

Keeping on top of your business finances needn’t be a nightmare and the tax savvy small business or self-employed professional can benefit from understanding how effective tax planning can make a positive difference to their income.

If you need advice on when to extract profits from your business in an efficient way please contact Dare Accountancy on 0845 2576835