37 Smart, Legal Ways to Take Money Out of Your UK Limited Company (Without Overpaying HMRC) 💼


Running a limited company in the UK often feels like playing a game where HMRC keeps changing the rules. But what if you knew how to play smart? This guide breaks down 37 clever, fully legal ways to get money out of your company, without giving half of it to the taxman.



💸 Classic Extraction Methods That Still Work

1. Salary vs Dividends 📊

If you're the only employee, a small salary (£9,100 or under) plus dividends is still a great combo. If you have staff, you might qualify for the Employment Allowance—meaning you could take up to £12,570 salary tax-free.

💡 Top tip: Use dividends on top, taxed at just 8.75% in the basic rate band. Don’t forget to file your Self-Assessment (SA100).

2. Pension Contributions 💼

Your company can contribute up to £60,000 per year into your pension—fully tax-deductible for the company and tax-free for you.

💡 Example: A £10,000 contribution reduces your taxable profit by that amount, saving up to £2,500 in Corporation Tax.

3. Director’s Loan Account 💷

Need cash short-term? Take a loan from your company, tax-free—just repay it within 9 months of year-end or HMRC hits you with a 33.75% tax charge. Over £10k? You may owe benefit-in-kind tax too.

4. Split Dividends with a Spouse 👩‍❤️‍👨

Transfer shares to your partner. If they earn less, you can legally shift £13,070+ of dividend income to them tax-free.

👉 File the share transfer at Companies House.

5. Employ Your Spouse or Kids 🧾

As long as they’re doing real work—social media, emails, admin—they can be paid a salary within their personal allowance. That’s £12,570 tax-free to them and deductible for your company.

🏠 Home, Family & Everyday Expenses

6. Rent Your Home to Your Company 🏡

Use a room at home? Charge your company rent—say £250/month = £3,000/year. Taxable income to you, but deductible for your company. Just draw up a basic license agreement.

7. Charge Interest on Personal Loans to Your Company 💸

Lent your business money? You can charge interest. The company gets a deduction, and you can claim the £1,000 savings allowance.

8. Employee Ownership Trust (EOT) 🚀

Sell your company tax-free by transferring it to your employees. No Capital Gains Tax. This works well if you’re planning a long-term exit.

9. Company Buyback of Shares 💰

Instead of selling to someone else, your company can buy your shares. The proceeds can be taxed as capital gains, as low as 10% if you qualify for Business Asset Disposal Relief (BADR).

10. Reduce Share Capital to Release Cash 💎

Got large retained profits? You can do a formal capital reduction and take the excess out at capital gains tax rates—again, potentially 10%.

📈 Financial Hacks for Smart Directors

11. Alphabet Shares 🔤

Issue different classes of shares (A, B, C…) so you can vary dividend amounts. Great for tax planning across families or investors.

12. Trivial Benefits 🎁

Gift yourself up to £300/year tax-free. Max £50 per item. Think Amazon vouchers, chocolates, birthday gifts.

13. Annual Party Allowance 🎉

Spend up to £150/head/year on events. Even if you're a one-person company, yes, you can treat yourself.

14. Tax-Free Work Mobile 📱

One per employee. Paid for by the company. No benefit in kind. Zero tax. Must be in the company’s name.

15. Claim Business Mileage 🚗

Use your own car for work? Claim 45p/mile for the first 10,000 miles. 25p thereafter. Completely tax-free.

👶 Family, Fitness & Flexible Perks

16. Childcare Costs 🍼

Use Tax-Free Childcare: Pay in £8, get £10. Up to £2,000 per child annually. Only if both parents earn under £100k.

17. Cycle to Work Scheme 🚴

Get a tax-free bike via salary sacrifice. The company saves tax too. Great for commuting or justifying that carbon fibre road bike.

18. Homeworking Allowance 🖥️

Company can pay you £6/week (£312/year) tax-free for working from home. Or more with evidence.

19. Relocation Costs 🏡

If you move home for work, the company can pay up to £8,000 in costs, tax-free.

20. Pay for Professional Subscriptions 📚

Think ICAEW, CIPD, FSB. Company pays, gets deduction, and you avoid personal tax.

🚀 Scaling, Exiting & Innovating

21. Salary Sacrifice Schemes 💳

Trade salary for pension, EV car, bike scheme, or health insurance—lowering your tax and NI.

22. Tax-Free Termination Payments 📤

You can extract up to £30,000 when closing or exiting a company as a redundancy or goodwill payment.

23. Invoice Through a Second Business 📇

If you have a side hustle, invoice your main company for consulting. Must be genuine commercial work.

24. R&D Tax Relief 🔬

Spending on innovation? You can deduct 186% of eligible costs, or get cash back if loss-making.

25. Patent Box 🧪

Own or license a patent? Profit from it is taxed at just 10% instead of 25%.

🛠️ Extra Tips for Financial Efficiency

  • Sell personal equipment (e.g. laptop, camera) to the company at market value.

  • Use Relevant Life Insurance: Life insurance paid by the company, tax-free for the employee and deductible for the business.

  • License IP to your company: Charge for copyrighted frameworks or content.

  • Lease your personal assets: Like cameras or software licenses.

  • Claim business training costs if it improves your existing skills.

  • Defer income to next year if you’ll be in a lower tax bracket.

  • Plan for Business Relief: If your company is trading and you die, your shares could pass inheritance tax-free.

💡 Real-Life Example

Let’s say your company made £60,000 profit:

  • £9,100 salary → No income tax or NIC

  • £2,000 pension → Saves £500 in corporation tax

  • £500 dividends → No tax (within allowance)

  • £3,000 rent → Deducted from profit

  • Trivial benefits & cycle scheme → Extra perks, tax-free

Result: Money extracted = over £15,000 with minimal tax due.

❓ FAQs

Q: Can I combine these methods?
A: Absolutely. That’s the whole point—layer them smartly.

Q: Do I need an accountant?
A: 100% yes. These strategies work best with tailored advice.

Q: What happens if I abuse the rules?
A: Expect an HMRC enquiry, penalties, or worse. Play smart, play legal.

📍 Useful Resources

🎯 Final Word

You built the company. You took the risk. You deserve the reward.

Use these 37 HMRC-approved strategies to take money out of your limited company the smart way.

🧠 Want personalised advice? Book a free strategy call and let MA & CO Accountants help you win the game.

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