Realising Tax-Free Cash From Your Assets.
It’s rarely good news when it comes to avoiding tax but, if you are a director shareholder of a healthy business, it is possible to realise cash from your assets without incurring income tax or NI. If this sounds too good to be true, read on.
General tax legislation requires that director shareholders must pay income tax and NI on the income they derive from their company in exchange for their services as a director or employee, however payment from selling an asset to your company isn’t classed as income. It is important to note that the transaction must be commercial in that you are paid no more than or less than the asset is worth. It is also important to consider any potential benefits in kind.
For example, selling a commercial vehicle to your company works particularly well if you need to realise cash as efficiently as possible, as it is a depreciating asset. Other assets to consider would be furniture, artworks and machinery bought privately.
For advice on this and other tax matters, please call us on 01524 67111 where a member of our specialist team will be happy to help.
Author: Gill Lowcock FCCA
Gill joined Scott & Wilkinson in 2001 and qualified as an Accountant in 2004. Prior to studying Information Business Technology at Myerscough College, Gill attended Garstang High School. Gill is involved in all areas of accounts, audit...
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