The Power of Proactive Tax Planning: How One Founder Saved £55,716 Without Changing Their Take-Home Pay

At Smith & Johnson, we believe tax planning should begin with your goals, not your payslip.

This case study shows how a few strategic changes, based on a client’s personal circumstances, can deliver huge results. There were no schemes, no loopholes – just practical, proactive planning.

The Situation

A founder approached us with a simple goal:

“I want to take home about £6,500 a month. I don’t love the idea of pensions, but I know I should be doing something. I just don’t want to reduce my take-home to do it.”

They were running a profitable business, but their accountant had given them a one-size-fits-all setup: take a £124,000 salary, pay the tax, and move on.

No dividend strategy.
No pension contributions.
No other employees on the payroll.

The Problem

That structure was costing the business far more than necessary: • £41,832 in income tax • £4,490.60 in employee National Insurance • £15,856.20 in employer National Insurance • No access to the Employment Allowance

Total tax paid: £62,178.80 – just to take home £6.5k a month.

The Missed Opportunity

Their spouse wasn’t working at the time, but was interested in getting involved with the business.

More importantly, the founder was buried in admin tasks that were draining their time and energy. Things like inbox management, diary coordination, invoicing, and CRM updates.

We identified an opportunity to create a legitimate role that would free the founder up to focus on higher-value work – or simply work fewer hours.

The Solution

We built a structure that supported the client’s income goal, reflected real changes in the business, and made full use of available allowances: • Reduced the director’s salary to £12,570 • Introduced the spouse into the business as an administrator on the same salary • Paid each of them £37,430 in dividends • Made a £24,000 pension contribution via the company • Qualified for the Employment Allowance (no employer NI)

The Results

• Total tax bill reduced to £6,462.76 • Annual saving of £55,716.04 • Take-home income increased to £7,794.78/month • Pension contributions in place without reducing take-home pay • More time for the founder, less day-to-day admin stress • Fully compliant, with clear justification for every change

The Takeaway

This wasn’t some complex restructuring exercise.

It was a clear, proactive solution rooted in the client’s life, business, and goals.
And it only happened because we took the time to ask the right questions.

Why This Matters

Most accountants focus on filing deadlines and year-end compliance. That’s fine – but it leaves a lot of value on the table.

At Smith & Johnson, we partner with growth-minded founders to create financial strategies that reduce tax, increase clarity, and support real lifestyle goals.

Wondering if you’re overpaying?

If you’re earning £10k or more per month and haven’t had a tax planning review recently, there’s a good chance your current structure isn’t working hard enough for you. Lets have a discussion and ask the right questions ... often reducing your tax is simpler than you think.