Are You a Business Owner?
Optimising Business Tax Efficiently
Deciding how to take money from your business matters immensely. Whether remunerating via dividends or salary, the amount varies every tax year, as allowances and rates shift, but getting it right can save you thousands of pounds annually in tax and National Insurance (NI) contributions. We can advise on the most tax-efficient method of remuneration, taking into consideration your total income (including additional income sources such as property) and how to maximise pension contribution capacity, if required.
Contributing to pensions through your business structure can be incredibly tax-efficient in the long run. Your company can make pension contributions of up to £60,000 annually (subject to earnings rules, and carry forward may be available in some cases), with the payment qualifying for corporation tax relief and no National Insurance liability. This effectively means the government is subsidising your retirement savings through tax relief (at your company’s tax rate). However, this may be only suitable for certain business structures, which we can provide clarity on.
Understanding the distinction between capital and revenue expenditure is more important than you may believe. Overlooking this can result in potentially higher tax bills, or result in an enquiry from HMRC. We can help advise over whether to file as revenue or capital expenditure, and what capital allowances are available to you as a business owner.
We can help you
- Set up workplace pension schemes for your employees. We can also run on-site clinics to support employees with their personal planning.
- Arrange group life protection policies.
- Identify your options for exiting the business with an income or with a lump sum which will see you through retirement.
- Put the right insurances in place for your business, for example, business loan protection, key person protection and shareholder protection.
- Identify the risk of reaching the Pension Lifetime Allowance and find alternative, tax-efficient ‘homes’ for your savings and investments.
What our clients say
Establishing Wealth Inside and Outside of Business
Your decision on whether to operate as a sole trader or incorporate as a limited company affects not just your tax rates, but your personal liability, access to finance, administrative workload and profit extraction potential. Many businesses start as sole traders before incorporating down the line, as doing so too early can result in higher upfront costs and additional complexities. Leave it too late, however, and you may miss out on valuable tax savings. We can advise on the most appropriate and tax-efficient route for you,
If you’re running an innovative business, research and development (R&D) tax credits can provide substantial cash relief or reductions that you may not realise you’re entitled to. If you’re developing new products, services or processes, you may qualify.
Many business owners fall into the trap of having all their personal wealth (as well as their professional wealth) tied up in their company. This creates a considerable concentration risk which affects your entire financial future, particularly should your business face steep challenges. Diversifying your wealth through pension contributions, ISA investments, and property holdings provides resilience, flexibility and breathing room. Building liquid wealth outside your business gives you financial flexibility without needing to make permanent decisions about your company’s ownership or structure.
Employee Benefits and Retention
As your business grows, attracting and retaining talent becomes all the more important. Workplace pensions aren’t just a legal requirement since auto-enrolment became mandatory; they’re also a point of competitive differentiation. Understanding how to structure your pension offering, whether salary sacrifice or defined contributions, makes sense for business owners, as is understanding how to communicate the value to your team, which can provide real advantages in the quest for talent. For key employees, Enterprise Management Incentive (EMI) share option schemes can be powerful retention tools. These allow you to give employees a stake in the business’s success with significant tax advantages, though the rules around EMI schemes are complex and require specialist advice to implement correctly. We can advise on the correct, lawful setup and management of such schemes, giving you complete clarity and reassurance.
Business Exit or Succession Planning
Whether you’re five years or twenty-five years from retirement, never underestimate the value of having a clear succession plan. Business owners who leave this too late often face the uphill tasks of trying to hastily sell their business while under financial scrutiny or pressure, accepting a lower valuation, or finding themselves unable to retire because the business can’t function without them.
Your exit options may include selling to a third party (trade sale), selling to your management team (management buyout), passing the business to family members, or gradually winding down and extracting remaining value. Each route has different tax implications, timing considerations, and practical challenges. We can advise on the best route forward for you as a business owner, taking into consideration your role in the business, available reliefs (such as Business Asset Disposal Relief), your retirement plans, and business valuation.
Specialist Financial Advice for Business Owners
We work with business owners throughout Dorset and beyond who are building, growing, and eventually exiting their businesses. Our Chartered financial planners understand the unique challenges of extracting wealth from a business tax-efficiently whilst maintaining flexibility and building security outside your company.
From determining optimal salary and dividend strategies to planning business succession and retirement transitions, we provide ongoing advice that adapts as your business and personal circumstances evolve.
Our relevant services for business owners:
• Tax Planning – dividend optimisation and tax-efficient profit extraction
• Pensions – maximising company pension contributions
• Investment – building wealth outside your business
• Holistic Financial Planning – coordinating your business and personal finances
The value of your investments can go down as well as up, so you could get back less than you invested.
This content is for information only and does not constitute advice.
The Financial Conduct Authority does not regulate tax advice.
A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
Why work with us?
There are many reasons why over 2,000 people in Dorset, Hampshire and the South have chosen us to help them on their financial journey.
Ready to start your journey?
If you have any questions or would like to organise a no-obligation consultation at our expense, please complete this form.