How to Maximise your Limited Company Finances - Real Client Case Study
- Luke Turner
- 7 days ago
- 4 min read
By Luke Turner, Independent Financial Adviser
If you’re a limited company director, you may already be ahead of the curve when it comes to managing your finances tax-efficiently. But for many business owners, the journey often stops at the basics—drawing a small salary, topping up with dividends, and leaving surplus funds in the business account.
There’s so much more that can be done.
At Toro Wealth Planning, we work closely with limited company clients to make sure their personal and business finances are working in harmony—not just today, but for the long term. Here’s a recent case study that shows how we helped one family take full advantage of their financial position.
Case Study: Unlocking Potential for a Husband & Wife Business
We were approached by a couple in their early 50s, both directors of their successful limited company.
Their setup was typical:
Each took a salary of £12,570, keeping them below the income tax threshold.
They also drew £37,430 in dividends, keeping them under the higher-rate tax band.
The business had accumulated around £180,000 in retained profits, just sitting in the company account.
They were doing well—but not maximising the opportunities available to them.
1. Bringing the Children Into the Business
We identified that both of their children—young adults in education—could legally be brought into the business as employees. This is allowable so long as the payments are justified, and they perform genuine, meaningful tasks.
For example, if a child helps with admin, social media, marketing, or general business support, the business can pay them a reasonable wage. This can be particularly effective if the child is in a low or zero tax bracket, and it shifts money out of the company into the family—reducing corporation tax while also funding the next generation.
It’s a completely legitimate, HMRC-compliant way to make use of the wider family unit, so long as the payments reflect actual work done and are properly documented.
2. Pension Contributions – The Power of Carry Forward
Our next step was to examine their pension contributions. They had both underutilised their annual allowances in recent years. By using carry forward, we were able to make substantial backdated contributions—up to three years of unused allowance—into each of their pensions.
Importantly, because these pension contributions were employer contributions, the company was able to:
Offset the payments against corporation tax, resulting in significant savings.
Move funds out of the business and into tax-advantaged personal pensions.
Continue growing their retirement wealth in a completely tax-free environment.
For limited company directors, paying into a pension through the business can often be considered one of the most effective financial planning strategies available. It could reduce your corporate tax bill while helping to secure your financial future.
3. Key Person Insurance – Protecting the Business
We also established key person insurance for both directors. This type of policy protects the business in the event that one of the key individuals—such as a founder or director—dies or becomes critically ill.
Here’s why this matters:
It provides the business with a lump sum payout if something happens to a key individual.
This helps with replacing lost income, recruiting a replacement, or just maintaining operations during a difficult time.
Crucially, premiums may be tax-deductible, provided certain conditions are met (such as the business being the beneficiary, and the policy not being for shareholder benefit).
It can be considered an essential step for any SME where the business relies heavily on a few key people.
4. Electric Vehicles – Still a Good Deal? Not Always.
You may have heard that buying an electric car through your company is a great tax-saving strategy. And it was—until recently.
While the Benefit-in-Kind rate for electric vehicles was previously just 2%, it's now on a scheduled rise, and the first-year allowance (100% deduction for electric vehicles) has also changed.
Factor in rising car prices and reduced tax advantages, and in many cases, it’s no longer as attractive as it once was.
In our clients’ case, the numbers didn’t add up. We decided against purchasing a vehicle through the company, choosing instead to focus on other strategies that offered better long-term returns.
Final Thoughts
If you run a limited company, you have a powerful toolkit available to help you grow and protect your wealth—but only if you know how to use it effectively.
At Toro Wealth Planning, we specialise in working with business owners to:
Identify opportunities to improve tax efficiency
Plan for long-term financial security, including retirement strategies
Put arrangements in place to help protect against key business risks
Support intergenerational planning
Whether you’re drawing income, building wealth, or planning your exit, we can help you use your business as a vehicle for financial freedom—not just profit.
Want to make your business work harder for you?
Risk Warnings:
This guide and the example client situations provided are for illustrative purposes only and do not constitute personal advice or a recommendation, which should be based on your individual circumstances.
The value of pensions and any income from them can fall as well as rise. You may not get back the full amount invested.
Benefits of insurance products will be put at risk or cease altogether if premium payments are not maintained.
The FCA does not regulate some aspects of tax advice. HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen
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