Keep Money As Company Profit Or Pay Out As Dividend?

[2gbmum]

Which is more tax-efficient? My husband and I are co-directors of limited company. This year we're doing well and have some profit building up. We usually take dividends to supplement our salaries but I'm wondering if there's an corp tax difference if, at the end of the tax year, we've taken the money out via dividends or kept it in the company as profit.

We have an lovely accountant but he talks for England:) I was just wondering if there's a simple - keep it in or take it out - answer. Thanks.

[ToraToraTora]

the best way is to pay it into a pension plan then you won't pay any tax at all.

[DocHH]

Personally I do not think there is a simple - keep it in or take it out -answer. It is all rather dependant on both of your individual circumstances. For sure Pension Contributions are tax-efficient, but do you do that via Company Contributions, hence lowering tax on profits, or by salary sacrifice and supplementing the deficit by taking dividends, which do not attract NICs. Lots of questions to be answered.

I think you need to listen to your verbose accountant, ask some searching questions specific to your own circumstances and then take action appropriate. You might even find that the solution is different for each of you!

[2gbmum]

Thank you ToraToraTora and DocHH for your time. I have spoken to my chatty man and am now looking at pension options.