Ever wish your company could just pay your personal tax bill for you?
Well technically, it can.
(Stick with me before you get too excited)
The bit no one explains properly
When you take dividends, most business owners do this:
👉🏼 Decide how much they want
👉🏼 Take that amount out of the company
👉🏼 Then get a nasty surprise when the tax bill lands
Because here’s the thing most people forget…
That money you took? It included your tax
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Here’s the smarter way to do it
Instead of taking the gross dividend…
👉🏼 You take the net amount you actually want to keep
And leave the tax behind in the business.
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A quick example (excluding any salary)
Let’s say you want £40,000 in your pocket from dividends.
Most people:
Take ÂŁ45,000
Spend ÂŁ40,000
Panic when the tax bill arrives
The smarter approach:
Just take ÂŁ40,000
Leave the extra in the company (ÂŁ4,818)
When the tax bill comes, it’s already sitting there waiting
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So, is the company paying your tax?
Well, not officially.
HMRC would still say: That’s your personal tax bill, thank you very much.
BUT… In real life?
✔️ The cash stayed in the company
✔️ The company funds are used to pay it
✔️ No last-minute scrambles or panic
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Why this matters more than you think
I see this all the time:
Business owners earning good money but constantly feeling caught off guard by annual tax bills.
Not because they’re doing anything wrong but if it’s in your bank you forget it’s not all yours to spend.
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The simple rule to remember
👉🏼 Don’t take what the company can afford to give you (i.e profit after corporation tax)
👉🏼 Take what it can afford after deducting the dividend tax
👉🏼 Make sure you put the tax aside in another company bank account, so the business doesn’t use it for trading!
It’s not a loophole.
It’s not dodgy.
It’s just being smart with your numbers, instead of being caught off guard.