Guide to tax on withdrawals from a close company

My brother Derek and I are ‘zooming’. Six months ago that would have conjured up images of the two of us speeding along in a fast car. Now that couldn’t be further from the truth. We are each sitting in armchairs in our respective homes catching up on recent events.

Derek is his usual bombastic self. ‘I hate to wrench you away from your box set binge but I wanted to share my good news with you. Despite all this economic uncertainty my company is more than measuring up to expectation. Profits are at an all-time high. This is certainly helping to raise my spirit level.’

The DIY business

Derek is the managing director and 50% shareholder in Derek’s DIY Ltd (DDIY). He set up the company with his friend Dudley who is the other 50%...