Efficient Reward Strategies

When it comes to rewarding your efforts, one size does not fit all. At Lambert Chapman, we tailor reward strategies so they’re both fitting to your circumstances and tax-efficient.

Why smart reward strategies matter:

Running your own business gives you flexibility in how you extract profits. Rather than being limited to a salary, you can combine:

• salary

• dividends

• interest on director’s loan accounts

• business use of personal assets (e.g. your property)

But each of these options comes with tax and legal implications (e.g. qualifying years for pensions, benefit-in-kind rules). That’s where thoughtful planning becomes critical. But with the right structure, you can:

• maximise your after-tax income

• preserve eligibility for state pension and benefits

• ensure fairness and clarity across shareholders/directors

• stay compliant with HMRC rules

What we do for you:

We will work with you to design a reward strategy that fits your goals, responsibilities and tax position. Specifically, we will:

1. Review your shareholding structure
Explore whether payment of dividends is viable, and how share classes or ownership splits can help.

2. Structure remuneration vs dividends
Assess the optimal mix of salary and dividends for you and your co-shareholders, balancing tax efficiency and cash flow.

3. Incorporate director’s loan and property use
If applicable, determine whether loan interest or business use of your residential property makes sense.

4. Advise on benefits and perks
We’ll review car provision, medical schemes, mileage regimes, and other benefits in kind. We’ll help you decide:

– whether the company should supply your car or you should provide it personally

– the impact of mileage logs and treatment of costs

5. Customise per your individual circumstances
We tailor each package so it’s appropriate, sustainable, and tax-efficient for you.

How it works:

• We begin with a consultation to understand your business, cash flow needs, personal goals, and existing tax position.

• We run scenarios (tax cost, net benefit, administrative burden) for different reward structures.

• We present you with clear options, explaining trade-offs and risks.

• We help you implement the chosen structure (drafting, payroll, compliance).

• We review it periodically as laws or your business evolve.

Why choose Lambert Chapman?

• Our team includes qualified tax advisers experienced in director/shareholder remuneration

• We combine technical tax insight with practical business sense

• We emphasise transparency – you’ll always know why we recommend one route over another

• We handle the implementation, not just the planning

➡️ Let’s talk…

Want to see how much more you could retain by optimising your reward package? Contact us today for a tailored proposal.

Frequently asked questions about reward strategies:

• What are efficient reward strategies?
  Efficient reward strategies are methods of structuring remuneration (salary, dividends, benefits) to maximise tax efficiency and optimise after-tax take-home for business owners and shareholders.

• Why is tax efficiency important in reward packages?
  Tax efficiency ensures that owners extract profit in the most favourable tax form, reducing unnecessary tax costs and increasing overall net reward.

• What options are available for business owners?
  Options include a mix of salary (to secure National Insurance & pension qualifying years), dividends, interest on a director’s loan account, and benefits in kind (e.g., company car, medical).

• How are benefits in kind handled?
  Benefits in kind such as a car or medical cover must be assessed for tax implications; decisions depend on business usage, mileage, and valuation rules.

• Does shareholding structure matter?
  Yes – reviewing the shareholding structure can reveal opportunities to distribute dividends more favourably among shareholders.

• How do I get started with efficient reward planning?
  Contact a tax adviser or firm with experience in structuring reward packages to review your circumstances and tailor a solution.

• Can Lambert Chapman help with this?
  Yes – Lambert Chapman advises business owners on efficient reward strategies, helping design a bespoke, tax-efficient remuneration package.