How to Take Money Out of Your Limited Company

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Director's loan

A director's loan is when is when you get money from your company that is not:

• A salary, dividend or expense payment
• Money that you have previously paid into or loaned the company

Records must be made of any directors loans made or paid back into the company, and taxes are sometimes applicable.

Reimbursement of expenses

Any cost which you have incurred personally, which has been made exclusively for the purpose of your business, can be claimed as a legitimate business expense. Whilst your business will receive tax relief on these expenses, you will also be able to reimburse yourself personally.

The main bulk of these expenses typically include business miles, insurance and equipment, but can include any necessary costs. Although business expenses are unlikely to make up a large portion of your take-home pay, this is a useful way to maximise your tax efficiency. This includes pre-incorporation expenses.

Dividend payments

Once your limited company has started making a profit, these profits will be subject to Corporation Tax of 19% (2022/23), but the remainder can be paid to directors and shareholders in the form of dividends. This is a way of dividing up the company's profits and distributing them based on the percentage of the company they own.

Dividends can be paid at any point during the financial year, providing there are retained profits available. It is entirely your choice as to when and how much you pay.

To take dividends out of your limited company, you will firstly need to hold a meeting with your company directors to declare the dividend. A dividend voucher must also be given to each shareholder, outlining the dividend paid.

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