This series is aimed at owner-managers and busy finance leads who want plain-English, actionable ways to keep more of what they earn.
We’ll cover practical, HMRC-aware tactics—from solvent company exits (MVL) and salary sacrifice (including EVs) to smart share schemes (Growth/EMI) and overlooked wins like professional subscriptions with simple examples and back-of-the-envelope maths.
Each edition is a quick read with a clear next step; no jargon, just what works right now.
1) Closing a solvent company? Consider an MVL
If you’re winding up a solvent company with cash left in it, a Members’ Voluntary Liquidation (MVL) can be a tax‑efficient way to return money to shareholders.
In short: directors confirm solvency, appoint a licensed liquidator, creditors get a short window to claim, and any surplus is distributed to shareholders before the company is dissolved.
Why people choose it Distributions in an MVL are usually taxed as capital, not as dividends — often a lower overall tax outcome for shareholders (especially higher/additional‑rate taxpayers).
Example (not advice):
You’ve £300,000 of retained profits. If you extracted that as dividends at top rates, the tax bill could be ~£115k+.
If instead it’s treated as capital in an MVL and you were taxed at ~14%, your bill might be ~£42k, saving ~£70k+ overall. (Numbers rounded; actual outcomes depend on your position, reliefs and rates at the time.)
Watch‑outs
- Phoenixing risk: re‑starting a similar trade too soon after a distribution can trigger an income‑tax treatment.
- Settle Corporation Tax first and tidy any director’s loans before you start, it keeps things clean and avoids nasty surprises.
Tip: In some cases a cheaper strike‑off can work just fine. We’ll compare costs, timing and tax before you choose.
2) Salary sacrifice: more value from the same payroll
With salary sacrifice, an employee swaps part of their cash pay for an approved, non‑cash benefit, think pension, electric car, workplace nursery, or cycle to work.
Done properly, both the employee and employer save National Insurance (NI). For 2025/26, the main employer NI rate is 15%.
Real‑world EV example (salary sacrifice)
Scenario: Mid‑rate taxpayer chooses a new electric car via salary sacrifice. List price £40,000.
- Tax they pay on the car (BiK): EVs are taxed on 3% of list price in 2025/26 → £1,200 “benefit” for the year. At 20% income tax that’s £240 (about £20/month). Rates are scheduled to step up gradually to 5% by April 2028, still far lower than petrol/diesel bands.
- Why salary sacrifice works for EVs: Ultra‑low emission cars (≤75g/km CO₂) are outside the “OpRA” salary‑sacrifice restrictions — you’re taxed on the car’s BiK, not the cash you gave up.
- Employer saving: Every £1,000 of salary sacrificed typically cuts employer NI by ~£150 at the 15% rate. (We’ll show your exact numbers.)
Quick checks: Get the paperwork right before you start, don’t drop anyone below National Minimum Wage, and consider knock‑ons for mortgages, parental pay and benefits.
3) Share schemes that keep great people
Big bonuses get hit hard by tax and NI. Two smarter, staff‑friendly routes:
Growth shares (simple “skin in the game”) Create a new class with a hurdle.
Team members buy at a low market value; most of the reward is the growth above the hurdle.
On exit, gains are typically taxed as capital, not salary, aligning interests without loading PAYE/NI.
EMI options (flexible and tax‑efficient) For independent SMEs (asset limit, headcount and trade rules apply), you grant tax‑advantaged options, usually at market value, with up to 10 years to exercise.
Often there’s no income tax/NI on grant or exercise, and the company gets a Corporation Tax deduction when options are exercised.
Snapshot:
Give a rising star EMI options over shares worth £25,000 today. If the company triples and they cash out at £75,000, most/all of that £50,000 gain is taxed as capital instead of as a bonus — typically a much better net result.
4) Professional fees and subscriptions — easy win
If you or your team pay annual fees to an approved professional body that’s relevant to the job, you can usually claim tax relief and back‑claim up to 4 prior tax years.
You can claim via Self Assessment, HMRC’s online expenses service, or by adjusting your PAYE code To check if a body is approved, look it up on HMRC’s List 3 (updated regularly).
What doesn’t qualify? Entrance fees and lifetime memberships don’t qualify — and if an employer pays those, it can trigger tax and NI. (Regular annual subscriptions, paid or reimbursed by the employer, are normally fine and deductible for the business.)
Example:
You pay £300/year to a qualifying body. • Basic‑rate taxpayer (20%): claim £60 back. • Higher‑rate taxpayer (40%): claim £120 back. Back‑claiming 4 years at £300 could be £240–£480 back, depending on your rate.
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This is general information, not tax advice. Tax rules change and personal circumstances matter. Rates and thresholds are correct to the best of our knowledge as at 06 August 2025