Extraction of Profit 2012/13

It’s become an annual ritual hasn’t it? Every Budget sees a tinkering with personal and corporate tax rates. For a company director/shareholder is it more efficient in 2012/13 to extract profit by paying extra remuneration or is it better to do so by dividend?

There’s no hard and fast rule in all cases but in most cases the rule is pretty hard and pretty fast. As in previous years dividend wins in all cases. A higher or additional rate taxpayer will, as a general rule, save a few % by taking a dividend as a shareholder rather than extra remuneration as a director whether the company’s profits be small, large or marginal. Give us a call if you want specific figures for your company.

And, as we warn you each time this is discussed, don’t automatically assume that the general rule will fit your situation. In real life companies often have different shareholders and different directors, some old and some young, quite often with different agendas and a certain amount of politics may be involved. Quite often the plan has to be tailor-made to suit the circumstances. One size doesn’t fit all and specific
numbers may need to be crunched.

That’s all the more reason to get in touch.