Company Director & Shareholder Tax Planning

Company directors and shareholders often have several ways of extracting income and capital from their businesses.

Choosing the right approach requires consideration of both the personal tax liability and the company's Corporation Tax position.

GSC Tax Consultancy provides specialist tax planning for directors, shareholders and owner-managed businesses.

What GSC Tax Consultancy Can Do for You

We can review how you currently extract funds from your company and model alternative strategies.

This can include:

• salary and bonus planning;
• dividend planning;
• employer pension contributions;
• director's loan accounts;
• benefits provided by the company;
• repayment of amounts owed to directors;
• share ownership between spouses or civil partners;
• different classes of shares;
• extracting surplus company cash;
• purchasing assets through a company;
• planning before retirement or a company sale; and
• Capital Gains Tax and Inheritance Tax considerations for company shares.

Rather than simply comparing headline Income Tax rates, we calculate the combined company and shareholder tax cost of the available options.

Salary or Dividends?

Salary can generate a Corporation Tax deduction for the company but can also create Income Tax and National Insurance contribution liabilities.

Dividends are taxed differently and do not generally provide the company with a Corporation Tax deduction.

The most efficient approach therefore depends upon the company's profits, the director's other income and the amount being extracted.

We can model alternative remuneration strategies before payments are made.

Director's Loan Accounts

Director's loan accounts can create unexpected tax consequences where a director owes money to their company.

Potential issues include:

• Corporation Tax charges on outstanding loans;
• beneficial loan benefits;
• repayments and subsequent withdrawals;
• dividends used to clear loans; and
• loans being released or written off.

Planning should therefore take place before the company's year end wherever possible.

HMRC guidance: Director's loans

Share Ownership and Family Planning

It can sometimes be appropriate to review how shares in a family company are owned between spouses or civil partners.

This can affect dividends, Capital Gains Tax, succession planning and Inheritance Tax Business Relief.

However, share transfers should be commercially genuine and the tax consequences should be considered before any change is implemented.

Planning Before Selling Your Company

Directors considering a future company sale should review their position well before negotiations become advanced.

Areas to consider can include:

• Business Asset Disposal Relief;
• Substantial Shareholding Exemption;
• trading company status;
• surplus cash and investments;
• share ownership;
• holding company structures;
• extracting funds before or after sale; and
• retirement and succession objectives.

Early planning can preserve options that may disappear once a sale becomes legally binding.

Speak to a Director Tax Planning Specialist

If you own or manage a company, we can review your existing structure and identify opportunities to improve the overall company and personal tax position.

Contact GSC Tax Consultancy for a confidential discussion about director and shareholder tax planning.

Specific advice should be obtained before implementing any remuneration, share or company restructuring.