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Extracting profits from your personal or family company

Shared from Tax Insider: Extracting profits from your personal or family company
By Sarah Bradford, July 2024

Sarah Bradford considers options for extracting profits from a company in a tax-efficient manner in the 2024/25 tax year. 

A company is a separate legal entity, distinct from the shareholders that own it. Consequently, if the directors and shareholders want to use the profits made by the company for their personal use, they will need to extract those profits first. There are various ways in which this can be done; some are more tax-efficient than others.  

If you are a company owner, the optimal profit extraction strategy will depend on your personal circumstances, including what other income you have, the allowances you have available and the amount of profits you need to extract. It will also depend on the company’s financial position and the level of its retained profits. While it is arguably worthwhile extracting profits where this can be done without paying any personal tax or National Insurance contributions (NICs),

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