There are several way to extract value or release funds from your company. The top 10 methods of extracting value are listed below, however options 1 to 3 are normally only available to shareholders who work in the company as a director or employee.
- Directors’ remuneration and paying salaries to other family members;
- Provision of benefits in kind and company shares;
- Pension contributions;
- Charging rent on personally owned property which is used by the company;
- Selling assets to the company;
- Charging interest on loans to the company;
- Loans or advances from the company;
- Purchase of own shares; and
- Liquidation of the company.
It is important to determine the tax efficiency for each method as the overall tax cost may vary depending on your circumstances. On an on-going basis, shareholders who are also employees may, in addition to drawing a normal salary, decide to extract company profits by means of a bonus or dividend.
Alternatively, owner-managers can ensure that adequate provision is made for their future pension and that tax efficient benefits in kind are provided.