Summary of Tax Planning Strategies for Limited Company Directors

Extracting Funds to Cover Living Expenses

Operating through a limited company requires proactive planning to extract funds efficiently. Strategies such as taking a small salary and paying dividends from retained profits are common. However, if the company faces a lack of retained profits, other options like paying additional salary, taking a director's loan, or putting personal bills through the director's loan account can be considered (p.2).

Making Negligible Value Claims

When assets become worthless, making a negligible value claim can help realize losses to reduce capital gains tax liability. Providing detailed information, evidence, and meeting specific conditions are crucial for a successful claim. Examples include claiming for company shares in liquidation and providing necessary documentation to HMRC (p.3).

Amending PAYE Settlement Agreements for Covid-19 Benefits

PAYE Settlement Agreements allow employers to cover tax on certain benefits for employees. Amendments to include Covid-19 related benefits need to be made by a specific deadline. Exemptions have been introduced for Coronavirus-related benefits to avoid tax charges, and new PSAs need to be set up by a certain date if not already in place (p.4).

TaxAngles - June 2021 edition - Flipbook by Fleepit