For many founders, there’s a nagging contradiction at the heart of business finance: show more profit and you pay more tax; reduce profits and you might save tax, but your business looks weaker, there may not be enough after-tax profits to pay dividends, and you’re no better off personally. What really matters isn’t minimising tax at all costs – it’s maximising what you take home after tax, sustainably, consistently and legally. The real measure of success isn’t what your accounts say – it’s what funds your life, your freedom and your future. Here’s how smart founders retain more profit and take home more money, tax-free.

The profit vs. tax dilemma
Too many founders view tax and profit as opposing forces. But you don’t need to choose between high profits and low tax – you need to structure your finances so both serve your end goal: more take-home income and long-term value. Reducing profits for tax reasons can limit access to finance, reduce your business’s sale value, encourage frivolous spending when you feel cash-rich, and create a “scarcity” mindset. But high profits with poor tax planning can be just as damaging. The key is to make profits work smarter-not harder.

One of the questions I’m often asked by founders is: “How can I pay little or no tax?” It’s a fair question, but it misses the point. Paying no tax often means making no money—and that’s not the goal. Tax itself isn’t bad; it’s a sign of success. But no one should pay more tax than necessary.

Strategic Expenses: Reduce tax without waste
Every legitimate expense reduces taxable profit—but this isn’t a licence to spend for the sake of saving tax. Founders should review and claim:

• Use of home as an office — you can lease your home office to your business, creating a deductible expense and tax-efficient personal income.
• Business mobile phones — deductible with no benefit-in-kind.
• Mileage and business-related travel/subsistence costs — ensure records meet HMRC requirements.
• Professional training, software and subscriptions — deductible if directly relevant to your business.
• Health insurance – busy founders can’t afford delays; health cover ensures faster care and less downtime.

These aren’t loopholes-they’re common, legitimate costs that many overlook. Reviewing them regularly reduces taxable profit appropriately and retains more money for you and the business.

Pensions: Slash corporation tax and build wealth
Employer pension contributions are one of the most powerful, underused tax strategies for limited company owners. A company paying a £60,000 pension contribution could save around £15,000 in corporation tax—and the director receives that money tax-free in their pension pot. No income tax, no NICs, and the pension grows tax-free. This is especially useful in high-profit years. The contribution must be justifiable- i.e., you’re actively involved and the amount is “wholly and exclusively” for business purposes – but when used correctly, it’s one of the cleanest ways to extract value.

Claim trivial benefits and tax-free perks
These benefits may seem small, but they add up – and they’re 100% tax-deductible.

• Trivial benefits: Up to £300 per director per year, tax-free. Think gift cards or seasonal gifts- each up to £50, with no tax or NICs.
• Relevant life insurance: Company-paid life insurance, fully deductible and no benefit-in-kind charge.
• Electric vehicles: tax-efficient when structured properly.

These perks may not feature in every accountant’s advice but can add up to thousands in saved tax and enhanced take-home value over time.

Structure salary, dividends and pensions wisely
A tax-efficient remuneration strategy is key. For most UK company directors, this will involve:

• A salary up to the NIC threshold (~£12,570)
• Dividends within the basic rate band
• Employer pension contributions for long-term extraction

Where a spouse or child works in the business, use their allowances too. With a proper structure, founders can legally take home far more than they otherwise would—while still building personal wealth and reducing company tax.

Change the Goal: From Minimising Tax to Maximising Value
Trying to pay zero tax is short-sighted. It often means you’re not making money and leads to poor cash control. Instead, aim to build a profitable business that supports your lifestyle now and your financial freedom later. That means retaining more profit in the business, while knowing how and when to extract it tax-efficiently. It’s a mindset shift – from avoiding tax to building value. The smartest founders aren’t obsessed with cutting tax – they’re focused on keeping more of what they earn. With the right planning, you can retain more profit in your business and take home more, tax-free. A short conversation with a commercially-minded accountant could unlock thousands in annual savings – and years of financial clarity.