HM Revenue and Customs (HMRC) is tightening its grip on how business owners extract profits from their companies, placing traditional remuneration approaches under intense scrutiny.

What are the ‘traditional remuneration approaches’?

• Paying a small salary and a dividend over the years; or
• Borrowing money through the director’s loan account and clearing it with a large dividend at the year-end

With enhanced data collection, additional tax return disclosures, and the rollout of Making Tax Digital (MTD), HMRC will have more insight than ever into how profits are distributed. They’ll be closely monitoring the timing of dividends, the use of different share classes, and whether income’s being taxed correctly.

So what should you do?

This isn’t a future risk, it’s happening now. Business owners need to reconsider their remuneration strategies.

At TC Group, we support our clients with their remuneration plans, making sure they’re effective, commercially viable, and thoroughly documented.

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