The example above is for the tax year 2013/14, assumes that the recipient has no other taxable income, is a UK resident and the business is operating within the tax year, has no losses brought forward and owns 100% of the business. It also assumes no charitable donations, no pension contributions and no other tax deductible investments and equal expenses in all three businesses, which is unlikely to be the case as companies have more administration costs.

The examples above are intended to provide an indication of the likely take home pay and are not a guarantee of income. We have ignored benefits (including child benefit) in this calculation, but benefits are likely to be affected by changes to your income.