Case Study: Helping withdraw wealth from the business without giving it to the taxman


At Continuum we focus on our clients as individuals and look first at their financial needs – but many of our clients also run businesses and therefore have corporate financial planning needs as well.

Terri Hall is an Independent Financial Adviser and member of the Continuum team, based in Brackley, Northamptonshire. She has more than 11 years of experience working within the financial services industry and she uses this experience to offer clients a personalised and bespoke financial planning service.

For Terri, this often includes helping clients with their business interests. “When you run your own business, your business and private financial dealings tend to blend together. Being able to provide answers in both sectors is an important plus for my clients, and one of the advantages many people with a business to run have recognised as a Continuum strength.”

Terri recently helped two clients who ran a business find answers to a pressing need – finding the best way to take some of the wealth that they had built up in their business out of the company without having to give a large slice of it to the taxman.

“Tax and tax efficiency is an important topic for everyone, and for many of my clients with a business to run, it is a high priority. The rules and regulations are complex and taking out the money your business has made in the wrong way, can trigger all kinds of costs and penalties from HMRC. Fortunately, there are some proven solutions which can help you keep more of your cash.”

Terri’s clients were a married couple who ran a small business that they had set up as a limited company a number of years ago, and it had been running much more successfully than originally forecast.

“The main reason for their call, and subsequent meeting was that they had well over £500,000 in the company bank account. This was surplus cash not earning much interest. My clients wanted to see how they could take out some of the funds as tax efficiently as possible.”

Tax efficient protection

Firstly, Terri recommended relevant life cover, which is a life insurance that can be paid through the company and as such being tax efficient and not a P11D benefit.

“They had set up a standard Nest pension along with employees simply to meet regulations, putting the same minimum amount of pension in. I recommended they put £160k each into a pension across the end of one tax year, and the beginning of the next tax year using their carry forward allowance.

Tax savings and building for the future

The total contribution, i.e. the funds taken out of the company tax efficiently, was £320,000.

Due to the favourable situation for pensions, the total corporation tax savings from making these contributions across two tax years was a significant £60,800.

“It meant a very big saving on tax – and two very happy clients.”

We have the expertise to help you solve your financial challenges. Whether you need expert advice with your own personal financial arrangements or company planning, someone can look at all your personal and business affairs, we have knowledge in both aspects, and can help. Please get in touch today for us to assist.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation tosuitable investment strategy, you should seek independent financial advice before embarking on any course of action. Levels and basis of reliefsfrom taxation are subject to change and depend upon your personal circumstances. The Financial Conduct Authority does not regulate taxation and trust advice or Will writing.

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