Remuneration planning strategies – time to reassess

HM Revenue and Customs (HMRC) is tightening its grip on how business owners extract profits from their companies, placing traditional remuneration approaches under intense scrutiny.

WHAT ARE THE ‘TRADITIONAL remuneration APPROACHES’?

• Paying a small salary and a dividend over the years; or
• Borrowing money through the director’s loan account and clearing it with a large dividend at the year-end

With enhanced data collection, additional tax return disclosures, and the rollout of Making Tax Digital (MTD), HMRC will have more insight than ever into how profits are distributed. They’ll be closely monitoring the timing of dividends, the use of different share classes, and whether income’s being taxed correctly.

This isn’t a future risk—it’s happening now.

Now’s the time for business owners to reconsider their remuneration strategies.

While legitimate ways to extract profits from your company still exist, the right approach depends on your individual circumstances as a business owner, your company’s structure, income requirements, and overall profitability.

 

WHAT SHOULD YOU DO?

We’re already helping our clients get ahead of these changes, making sure they have effective, commercially viable remuneration plans that are thoroughly documented.

If challenged by HMRC, they’ll be fully prepared with a comprehensive policy in place.

If you want to understand and prepare for the upcoming changes, contact us today. We’ll ensure your remuneration policy is compliant and ready for whatever comes next.

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