Year End Tax Planning 2021/22

As a new tax year approaches, it is important to ensure you are in the best financial position to help protect and grow your future wealth.

Our Bitesize Tax Planning provides you with details of the key allowances and reliefs available to you. The tax planning tips are available in easy to consider sections.

This article looks at Extracting Company Profits.

Surplus Cash

Cash is something companies love to have but there can be such a thing as having too much. Cash that is idle may not only be earning a zero or negligible return; it may actually be losing purchasing power when compared with market prices.

A company may look at other options for surplus cash balances.

Corporate investing is simply investing the profits of your business, instead of drawing it as income or holding it in cash bank accounts.

Although a business owner can choose to pay themselves in dividends or through a salary, taking too much out of the business to simply sit in your bank account can result in a hefty tax bill. Conversely, allowing profits to mount up in your business account means it isn’t actively working for you or the company.

Some options include:

  • Funds
  • Trusts
  • Pensions
  • Individual stocks
  • Bonds
  • Commodities

Corporate investing in a way that mitigates tax can be a complex. As with all investments, the value can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.

For more information or to discuss any of the issues raised in this article, please contact your adviser, or call us directly on 0161 819 1131.

See the other topics in our Bitesize Tax Planning series:

Personal circumstances differ and not all of this information is applicable to every client and/or their business, this information is general in nature and should not be relied upon without seeking specific professional financial advice.

The financial conduct authority does not regulate tax advice, estate planning or will writing.

The content in this article is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.

Thresholds, percentage rates and tax legislation may change in subsequent finance acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.

Pareto Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.