Sarah Bradford outlines strategies for extracting profits from a personal or family company.
As a new tax year starts, it is prudent for clients running owner-managed and family companies to review their profits extraction strategy; tax changes may mean that what worked well in 2025/26 will be less attractive in 2026/27.
A company is a separate legal identity from its shareholders and directors, which means that if those owning and running the company wish to use the profits from the company personally, those profits must be extracted. There are various ways in which this can be done, for example, by paying a salary or a bonus, taking dividends, providing benefits-in-kind, paying rent for use of a home office or by making pension contributions. Depending on the route taken, there may be tax and National Insurance contributions (NICs) to pay.
