Our client, a specialist manufacturer of machinery parts, had traded successfully for five years.
Smart planning for tax-efficient extraction of profits
The four share-holding directors hoped to move into new and larger premises, but they were unsure of the best way to finance this. Four share-holding directors had been drawing annual salaries of approx £45,000.
On appointment as accountants to the company, P A Hull & Co. held an initial meeting with the directors. We suggested an alternative and more tax efficient way for the directors to draw money from the company and helped them review their company car policy. The directors were worried about their different circumstances, especially because the oldest director hoped to retire soon and sell his shares in the company. We explored all the options available to them.
We discussed the possibility of a pension scheme to purchase the property and explained the implications of this.
We now have regular quarterly meetings to discuss the management information that we produce from their records, and we are able to see the directors’ plans come to fruition. The company has made considerable tax savings based on the advice we gave and now trades from new purpose-built premises owned by the pension scheme.