Sarah Bradford explains how profits can be extracted from a family company other than as a salary or dividends.
Where a business is operated as a family or personal company, the director-shareholders may need to extract the profits to use them personally outside the company.
The first two parts of this article looked at the implications of paying salary and taking dividends. In this third part, I’ll look at some other ways that profits can be extracted.
Pension provision
Although directors fall outside the scope of auto-enrolment, it can be highly beneficial and tax-efficient for a personal or family company to make contributions to a director-shareholder’s personal pension scheme.
Although employer contributions count towards the annual allowance, they are not subject to the 100% earnings cap that applies to personal
