Tax Efficient Remuneration

24th January 2016
  • Examining whether it is best to run the business as a limited company or otherwise (sole trader, partnership or LLP),
  • If operated as a limited company:
    • Looking at the combined business and personal tax ‘picture’ and optimising the mix of retained profits, salary, bonus and dividends (for the business owner and, where relevant, immediate family members). In order to direct dividends tax efficiently, it may well be appropriate to create a structure with ‘alphabet’ shares,
    • Where the business occupies premises owned personally, comparing the income taxcapital gains tax and inheritance tax issues of whether or not to charge a rent,
    • Maximising receipt of tax free benefits in kind (either as additional remuneration or via a salary sacrice scheme),
    • Examining whether it is acceptable and appropriate to receive taxable benefits in kind,
    • Whether it is better for cars to be owned and expensed by the company, by employees personally, or by a separate unincorporated service business,
    • Whether company car tax could be reduced, without unacceptably prejudicing choice, by changing the vehicle to:
      • A lower CO2 emission car,
      • A classic car (aged over 15 years old and now worth less than £15,000),
      • A van (including some twin cab pick-ups),
      • A pool vehicle
    • Whether it is cheaper for employees to reimburse the company for the full cost of privately used fuel, or suffer the tax charge on the fuel benefit in kind,

    As well as structuring remuneration to be tax efficient, we are mindful that there are often other drivers behind this process:

    • Linking financial reward to actual performance, to motivate key individuals,
    • Making sure that the remuneration split assists with, and does not jeopardise:

Related Services

Payroll Tax Planning
Other items in Blogs
Harriet Sim
22nd October 2021 Self Assessment late payment penalties

HMRC are now issuing six month late payment penalty notices, as the due date for 2019/20 tax payments was over seven months ago (includes consideration to the additional months extension as a result of the pandemic). Taxpayers facing financial difficulties due to the impact of COVID-19 may have entered into a time to pay arrangement…

Nick Edgley
21st October 2021 Holiday lettings – declare to HMRC

If you own a UK holiday let are you declaring your rental profits to HMRC? If not time may be running out to make a voluntary disclosure of past profits.   HMRC has the power to request information, or documents, from third parties such as holiday booking sites; as well as being able to search…

Keri John
20th October 2021 Xero – Assigning Bills to Customers

You can now assign bills to customers in Xero!   This makes it easier to allocate expenses occurred during a job to the correct customer.   Perfect for Estate Agents, event planners and more.   When creating a bill to pay onto Xero there is an option to ‘assign the bill to a customer’. You…

Jake Day
20th October 2021 Minimising Your IHT Exposure

As Benjamin Franklin once said; the only two certainties in life are death and taxes. Although it’s a sombre subject, it is important to put in place the right planning so that when we are hit by one, we can avoid the other. We want to ensure we are able to leave as much of…

Paul Jefferson
19th October 2021 VAT Registration

A business must compulsorily register for VAT if taxable 12 month turnover exceeds £85,000. They can voluntarily register for VAT as soon as they start trading, providing they expect to make taxable supplies in the future.   Businesses that provide to other businesses may choose to register for VAT voluntarily before the registration threshold is…

Sharon Mace
13th October 2021 VAT DIY Scheme: HMRC update list of allowable expenses

There has been some controversy on claims made on DIY building schemes. HMRC have updated their guidance on goods and services that can be claimed under the VAT DIY Housebuilders’ Scheme.   The list is extensive and gives an ABC of items that are allowed, from Agas to woodworm treatment – but there’s a catch,…