Owners of smaller private companies are usually the shareholders and directors. They can then choose how to withdraw funds. Currently dividends are the most tax efficient method.

For 2022/23 the first £2,000 is tax-free. The rates are then:

• 8.75% if part of the basic rate income tax band.
• 33.75% if part of the higher rate income tax band, and
• 39.3 % on the excess.