Profit Extraction and Succession Planning in OMBs

Part 1 - Profit Extraction

• Optimum mix of salary/interest/dividends
  • Impact of increased dividend tax rates from 2026/27 and previous
    • employee NICs cuts; and
    • employer NICs and corporation tax rises
  • The increasing attractions of disincorporation
• Use of directors’ loan accounts
  • Tax and other practical implications
  • The impact of the increase in the s.455 CTA 2010 tax charge on overdrawn loan accounts from 6 April 2026
  • Planning when making partial repayments of overdrawn loan accounts
  • Finance Act 2025 provisions related to arrangements where the loan is repaid but then withdrawn again by the participator from an associate of the original company
  • Dealing with loan accounts on a share sale
• Distributions in specie – the implications for several taxes
• Use of alphabet shares, including a case study
• Dividend waivers
  • Tax and practical issues
• FA 2016 anti-avoidance on company liquidations

Part 2 - Succession planning

• Spreading shares around a family – CGT tips and traps
• Pre-death planning in family companies
• Business Property Relief (BPR) – problem areas, including:
  • Property-based companies
  • Cash-rich companies
  • Partnership structures
  • Restrictions on 100% BPR and Agricultural Property Relief (APR) from 6 April 2026
    • The key implications, including where property held in trust
  • When Business Property Relief (BPR) is not available to mitigate IHT
• Use of ‘freezer’ shares and ‘money box’ companies
• The importance of obtaining ‘clearance’ before undertaking a transaction
  • Case study – Using a buy-out to pass a company on to children
• Demergers (statutory/liquidation/capital reduction)
  • Case study on using a capital reduction demerger to demerge property from a trading company that is to be passed on to a child

Our trainer is a Chartered Accountant who qualified with PwC in 1988, spending his last 18 months there in the Corporation Tax department. In 1989 he joined a leading financial training company as a tax tutor. Since 1992, he has been self-employed as a Professional Tutor and Training Consultant, specialising in tax update courses for accountants, lawyers and investment managers.

Our trainer speaks at conferences of various professional bodies, including the CIOT, and writes regularly for Tax Insider.

This course will make delegates aware of:

• The advantages and drawbacks of the different ways of extracting profits from private companies, including the impact of
  • dividend tax rises in 2026;
  • previous increases in corporation tax and employers’ National Insurance Contributions (NICs); and
  • previous employee NICs reductions
• Why some company owners should consider disincorporating
• The tax issues and problems associated with overdrawn directors’ loan accounts
  • including the increase in s.455 CTA 2010 charges on loans to participators from 6 April 2026
• The tax implications and risks of dividends in specie, dividend waivers and alphabet share structures
• When capital distributions on a striking off or winding up may be taxed as income
• The key CGT and inheritance tax (IHT) issues when passing on shares to family members, in particular
  • The new restriction (from 6 April 2026) on 100% business reliefs for IHT
  • Cash-rich companies
  • Partnership structures
• The use of demergers and buy-outs in a succession planning context
• Clearances and other compliance issues

• The trainer, a Chartered Accountant with over 35 years’ experience in tax training, has written on this subject for publications such as Taxation and Tax Insider
• The course covers a range of business and personal taxes
• There are many numerical examples and short case studies to aid understanding of potential tax exposure
• Tax traps and planning areas are highlighted throughout, along with relevant cases

This course will consider the many and varied tax issues related to profit extraction and succession planning in OMBs. It will cover a range of taxes and will include recent changes in legislation, guidance from HMRC and key case law, as well as several numbers-based examples and short case studies.

All relevant matters from the Autumn 2025 Finance Bill will be covered.