Making a withdrawal

Peter Mills provides guidance on changes to dividend taxation and how they affect profit extraction for SMEs

What is profit extraction?

How to extract profits from a business remains one of the fundamental questions facing owner managers and, as tax advisers, we are often asked to consider the most effective way of returning business profits to the owners.

The question continues to be relevant and whilst, simplistically, changes in legislation effected by Finance Act 2016 mean more tax to pay for the majority of SME owners they also provide a refreshing opportunity to reassess the effectiveness of existing extraction strategies.