Your company pays corporation tax on its profits, but you are only taxed personally on what you draw out of the company as a salary, bonus, or by other means.
The dividends you receive from your company are effectively tax-free in your hands, if your total income for the tax year is less than about £37,000.
Once you reach that limit you may want to think about extracting profits in different, more tax-efficient ways.
For some alternative approaches to extracting profits, visit our advisory guide.
Meanwhile, a wealth of information on personal financial planning can be found in our personal planning guides.
Date:23 May 2006
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