Designing a Tax‑Efficient Remuneration Package

The Challenge

Our client, a successful trading company, wanted a clear, structured approach to determining and managing the annual remuneration packages for its shareholders. They needed a strategy that would ensure fairness, maximise tax efficiency, and be supported by the necessary documentation.

The Solution

We began by reviewing the company’s projected cash flows to assess how much could be made available for remuneration in the upcoming tax year. Together with the client, we considered different options and the associated tax implications. For example, one priority was for all four shareholders to fully utilise their basic rate tax bands through a combination of salary and dividends, proportioned according to shareholding—with the benchmark set at the lowest shareholder percentage.

Using this principle, we calculated the dividend entitlements for each shareholder and prepared all supporting documentation to declare these dividends at the beginning of the tax year. In parallel, we also advised on the optimal level of tax-efficient pension contributions the company could make to each shareholder’s pension scheme annually. This included working alongside their wealth manager to ensure the pension contributions did not exceed each individual’s annual allowance.

The Value

The client now benefits from a consistent, transparent remuneration framework that supports both personal and corporate tax efficiency. Shareholders are confident that their earnings are fairly distributed and fully compliant with HMRC requirements, while the business maintains a strong grip on its cash flow and tax planning.