Am I paying too much tax?

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Most major strategic decisions in business will have tax consequences but the complexity of the UK tax system means that business leaders often face challenges evaluating the tax implications to make sure you’re not paying too much tax, help with minimising tax and taking advantage of available tax reliefs or opportunities.

Am I paying too much tax?

We work in partnership with entrepreneurs to optimise your tax position through dedicated teams of highly qualified and experienced business tax specialists who provide robust tax advice from initial establishment of a business to expansion, nationally or internationally, through to advising on exit or business succession.


Should I pay my Spouse dividends?

If you and your partner both own shares in the family business then you can consider paying dividends (in addition or instead of salary, benefits, or pensions) as part of your overall profit extraction strategy.  Depending upon your level of profits, it is likely to be beneficial to pay dividends as part of your overall strategy and split the total income between you both to utilise the personal allowance and basic rate bands rather than to one only.

If your spouse does not own shares, then the position is more complicated.  If you were to transfer them some of your shares, then that could be considered to be a settlement for tax purposes with the income continuing to be taxed on you.  If they contribute their own money for new shares, then that may well be acceptable to HMRC.

You should consult an advisor for all of the options in connection with extracting profit from your company and how to optimise this from a tax perspective.


Can I Claim R&D Tax Relief?

Any company that resolves difficulties or challenges and applies technology or science in doing this, should consider the relief, whether they undertake the work on their own behalf or on behalf of others.

This includes businesses developing new or improved products, processes, services, or systems and those that are technology, manufacturing or processing led.

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Our specialist tax team works with our clients to understand their businesses and to identify beneficial tax planning opportunities including:

  • Considering the potential reliefs available, including Patent Box incentives.
  • Protecting the intellectual property arising, including mechanisms to retain key staff.
  • Identifying qualifying activities and expenditure.
  • Navigating companies through the claims process.
  • Building staff’s knowledge of the regime, to improve project recognition and recording.
  • Developing systems to improve identification and recording of qualifying expenditure.

To speak to a partner or for more information about the tax services we offer please contact one of the Menzies LLP offices.


How should I pay myself?

If operating a sole trader or partnership, there may be limited options for profit extraction due to the nature of the structure.

However, shareholders of a private limited company should carefully consider how the profit of the company is to be extracted to meet their short and long-term financial needs.  Different tax rules and rates currently apply to salary and bonus payments, pension payments and dividends, with the latter subject to a lower tax rate and no national insurance. Dividends, however, are not a tax-deductible expense for the company and are less flexible due to company law restrictions.  

Ensuring the business is maximising any tax efficiencies will result in the business retaining more cash, for example capital allowances, R&D reliefs so should not be overlooked.


IF YOU HAVE ANY QUERIES ON MINIMISING YOUR TAX, CONTACT ONE OF OUR EXPERTS BELOW