For many profitable companies the tax costs of extraction are a disincentive and so profits accumulate. For owners there may be a sting in the tail as the excess cash is likely to jeopardise two important capital tax reliefs. The first of these is Entrepreneur’s relief which reduces the standard rate of Capital Gains Tax to 10%. The other is Business Property Relief which may exempts business value from Inheritance Tax. Both problems may be solved by removing profits, either into pension schemes or into Tax efficient investments, including Venture Capital Trusts and Enterprise Investment Scheme.
Don't Get Stung In The Tail...
Looking at profit extraction is a foolproof way of ensuring your business gets the most out of its finances. Speak to one of our advisers to find out more.