Personal Companies – Tips and Traps

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The Complete Guide to Running a Tax-Efficient Owner-Managed Company

By Sarah Bradford BA (Hons), FCA, CTA (Fellow)

Running a business through a personal company is never just a single tax decision, it's two. The company has its own corporation tax position, and the director/shareholder has their own personal tax position, and the two interact constantly, in how profits are extracted, how losses are relieved, how the director's loan account is run, and how the business is eventually sold, passed on or wound up. Get that interaction right and a personal company remains one of the most flexible and tax-efficient ways to run a business. Get it wrong, and the traps are numerous, and often expensive.

In this practical new guide, Chartered Accountant and Chartered Tax Adviser Sarah Bradford sets out exactly what every personal company director and their adviser needs to know to run the company efficiently, extract profits with minimum tax and National Insurance cost, and avoid the traps that catch out even experienced business owners.

This report will show you how to:

• Understand what counts as a personal company and the director's responsibilities that come with it
• Set up a new company, or incorporate an existing sole trader business, in the most tax-efficient way
• Calculate and minimise the corporation tax charge, including use of marginal relief and loss reliefs
• Claim the right capital allowances for plant and machinery, from the annual investment allowance to full expensing
• Meet the company's obligations as an employer, covering PAYE, Class 1 National Insurance and statutory payments
• Decide when to register for VAT and whether the flat rate scheme will save money or cost it
• Set the optimal salary and dividend mix for 2026/27, and identify other tax-efficient ways to extract profits
• Operate the director's loan account correctly and avoid an unwelcome section 455 charge
• Navigate the IR35 and off-payroll working rules and establish which set of rules applies
• Plan an exit, whether by gifting shares to the family, selling the company or closing it down
• Put a succession strategy in place so the business passes on the way the owner intends
• Plus much more...

Who will benefit from this report?

This guide is essential reading for any owner or director of a personal or family company, whether newly incorporated or long established, who wants to run the business as tax-efficiently as possible while staying on the right side of HMRC. It is equally valuable for accountants and tax advisers supporting owner-managed company clients through profit extraction, director's loan account and exit planning decisions.

If you own, direct or advise a personal company, this guide belongs on your shelf.

About the Author

Sarah Bradford BA (Hons), FCA, CTA (Fellow) is a Chartered Accountant and Chartered Tax Adviser. She is the director of Writetax Ltd, a company providing technical writing services on tax and National Insurance, and writes widely on tax and National Insurance, contributing regularly to Business Tax Insider, Property Tax Insider and Tax Insider Professional. She is also the author of numerous Tax Insider guides, including Tax-Efficient Ways to Extract Cash from Your Company, IR35 – Tax Tips for Contractors, Tax-Efficient Business Exit Strategies and Directors' Loan Accounts Explained.