Prudential’s extracting company profits tool allows users to review and alter a business owner’s current remuneration structure to see how this could impact various factors; including income after tax, retained business profits, pension contributions, and tax payable to HM Revenue & Customs (HMRC).
Dividend changes
“Remuneration strategies have never been higher on the agenda of small business owners,” said Les Cameron, head of technical at Prudential.
“The change to dividend taxation coming into effect next April will hit small business owners hard, especially those who are currently using the popular strategy of relying heavily on shareholder dividends from their business to supplement a small salary,” he added.
“As a result, many business owners will want to rethink their current remuneration strategy, which also creates the perfect opportunity for financial advisers and accountants to help them look at how they will fund their future income needs too.
“We predict that pension contributions will become a central tool in minimising the impact of next April’s dividend changes. Any income that is not required today could be used to fund employer pension contributions mitigating the effect of the new changes,” Cameron concluded.
