Prudential launches extracting company profits tool

23 November 2015

  • Free online tool for financial advisers and accountants
  • Tool launches ahead of changes to dividend taxation in April 2016
  • Advising corporates, company directors and SMEs seen as a growth area among advisers

Prudential has launched an online tool to support financial advisers and accountants in developing best practice strategies for business-owner clients wishing to extract profits from their companies as part of retirement planning activity.

The Prudential’s Extracting Company Profits Tool allows users to review and alter a business owner’s current remuneration structure to understand how this impacts factors such as income after taxation, the retained business profit, pension contributions and the tax payable to HMRC.

Les Cameron, Head of Technical, at Prudential said: “Remuneration strategies have never been higher on the agenda of small business owners. The change to dividend taxation coming into effect next April will hit small business owners hard, especially those who are currently using the popular strategy of relying heavily on shareholder dividends from their business to supplement a small salary. The need for advice has never been greater.

“As a result many business owners will want to rethink their current remuneration strategy which also creates the perfect opportunity for financial advisers and accountants to help them look at how they will fund their future income needs too.

“We predict that pension contributions will become a central tool in minimising the impact of next April’s dividend changes. Any income that is not required today could be used to fund employer pension contributions mitigating the effect of the new changes.

“There are of course wider benefits to pension savings in addition to operating your own business for retirement planning purposes. A pension is protected from any unexpected business failure, and gives business owners significantly more options in retirement, if they decide for example to wind down from their business, if ill health strikes or if it takes time to sell the business.”

Advising business owners is seen as a growth areas among financial advisers. The latest research from Prudential1 shows that more than two thirds of advisers say that establishing a formal relationship with an accountant will enable them to expand their existing business into providing services to large corporates and company directors, while 48 per cent believe they can target SMEs.

The Extracting Company Profits Tool is available free of charge at www.pruadviser.co.uk.

Extracting Company Profits Webex

Prudential is hosting a Webex session on Tuesday 8 December at 3pm for financial advisers and accountants which will cover dividend tax – how it works now and how it will work for 2016/17 tax year and a demonstration of the Extracting Company Profits Tool. Full information including details of how to register for the session are available at http://www.pruadviser.co.uk/content/knowledge/professional-development/.

Notes to editors

1 PollRight interviewed 120 IFAs online on behalf of Prudential between 24.08.15 and 01.09.15

Media contact

Louise Bryans

020 7004 8280

Louise.Bryans@prudential.co.uk

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