Clever Ways to Extract Money from Your Company & Make Extra Cash

🕒 Time to read: 3 minutes

Running a business is all about making money, but as a director, you also want to extract profits in the smartest way possible. Here’s a clever strategy to get extra cash from your company while staying tax-efficient.

Take a Director’s Loan – The Smart Way

A Director’s Loan allows you to borrow money from your company tax-free—provided you repay it within 9 months and 1 day of the company’s year-end. If you keep it within the limit of £10,000, you avoid any immediate tax charges.

✅ When to take it?
The best time to take a director’s loan is right after your year-end, so you get the longest possible repayment window.

✅ What to do with it?
Instead of spending it, put it in a high-interest savings account.

How Much Extra Money Can You Make?

Let’s say you take a £10,000 director’s loan and deposit it in a savings account offering 4% interest:

• Interest earned in 12 months: £400
• Cost to you? £0 (as long as the loan is repaid on time)
• Tax on interest? £0 (falls within £1,000 savings allowance for Basic rate tax payers and £500 for higher rate tax payers)

That’s £400 extra cash, enough to cover part of your accountancy fees or other business expenses!

Things to Keep in Mind

🔹 Keep it under £10,000 – Any more, and HMRC will treat it as a benefit in kind, meaning you’ll pay tax on it.
🔹 Repay within 9 months – Otherwise, you’ll face a 33.75% tax charge on the outstanding amount (refundable once repaid).
🔹 Watch your salary & dividends – If you take a low salary to stay tax-efficient, ensure you’re not leaving yourself short for repayments.

Maximise Your Company’s Money

This is just one of the many ways to extract profits from your company without triggering unnecessary tax. Directors’ loans, dividends, and expenses should all be part of your strategy.

💡 Why not let your company work for YOU?

Need more smart tax-saving tips? Get in touch! 🚀