Business Monthly: TAX ADVICE - Extracting Profits from Your Business ; A Little Research Can Pay Significant Dividends When It Comes to Maximising Your Cashflow, Says MICHAEL SNYDER

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The falling rates of corporation tax, coupled with the national insurance charges for benefits in kind and the changes to pension planning, make the decision on how to extract your profits from your company more complex. But there are still opportunities for owner- managed companies to maximise their tax efficiency.

A common decision is whether to pay a bonus or a dividend. This will perhaps depend on many factors, such as share ownership generally and pension planning, but is often purely tax driven.

A critical factor is the national insurance (NI) costs of the bonus. A dividend will always be the cheaper route until your taxable profits exceed pounds 300,000 …