How to withdraw money from my own UK company’s account

As a director of a UK company, you have several options to withdraw money from the company account.

1. Salary

You can pay yourself a salary as an employee of the company. This method is straightforward but involves paying Income Tax and National Insurance contributions (NICs). The company will also need to pay employer's NICs.

2. Dividends

Dividends are payments made to shareholders from the company’s profits. As a director and shareholder, you can declare dividends to yourself.

3. Director’s Loan

You can take money out of the company as a director’s loan. This must be repaid to the company. If the loan is not repaid within nine months of the end of the accounting period, the company will incur additional tax charges.

4. Expenses Reimbursement

You can reimburse yourself for legitimate business expenses incurred personally.

Tax Implications Comparison:

Salary:

• Income Tax: 20% basic rate, 40% higher rate, 45% additional rate.

• Employee's NICs: 12% (basic) and 2% (above higher threshold).

• Employer's NICs: 13.8%.
  

Dividends:

• Tax-free allowance: £2,000.

• Dividend tax rates: 8.75% (basic), 33.75% (higher), 39.35% (additional).

Director’s Loan:

• If not repaid within 9 months: S455 tax at 32.5% on the outstanding loan.

• Potential benefit-in-kind tax if interest-free loans exceed £10,000.

A common approach is a combination of a low salary up to the personal allowance and the rest as dividends. This optimizes the tax benefits and NIC savings. However, it is essential to consult with a financial advisor or accountant to tailor the strategy to your specific financial situation and ensure compliance with all tax regulations.

For more information and help, do not hesitate to contact us:

nadaccountingservices.co.uk