Directors Pensions
Provided that the company produces more than enough profits to meet the income needs of the owners, the disposal of the surplus is largely a matter of tax planning.
In brief it is possible to reduce your corporation tax, income tax and even National Insurance liability by careful use of pensions. At the same time you can create a private fund that can lend money to the company (as a very attractive alternative to banks, and in which all your interest payments go straight back into your pension fund), buy corporate property, and even be used to smooth the transfer of the company from the older to the younger generation.
The actual detail as to what can be done for your own company and objectives depends on many factors, including the ages of the controlling directors, their individual aims, their existing pension arrangements and the resources available to build the fund.
Last updated on October 1, 2008