It’s never too early to start thinking about tax so here are five of our top tax tips to help you save money and meet your business goals.
- Lower Tax Rates on Intellectual Property
Corporate holders of UK patents could benefit from tax rates as low as 10% in respect of profits arising from patent royalties or patented products.
- Protect Assets from Trading Risk or Divest Non-Core Activities
There are a number of tax free ways of restructuring groups of companies which could enable you to structure your business to suit your objectives. If your goal is to protect assets, such as tangible property or intellectual property, or if you simply want to separate non-core elements of the business with the view to selling then you should consider restructuring.
- Tax Efficient Remuneration
By planning salary and dividend levels in advance, you can ensure you are remunerated in the most tax efficient way which means no unexpected surprises when you calculate your tax liability. You should also consider if you can make any pre-year end pension contributions to reduce the company’s tax liability. Individuals are subject to an annual pension contribution allowance of £40,000 each year which includes both personal contributions and employer contributions. If you were a member of a registered pension scheme in a tax year and have unused annual allowance this can be carried forward up to 3 years so, even if you don’t plan to make any contributions this year, being a member of a pension scheme now may allow you make significant contributions in later years.
- Be “Exit-Ready”
When selling up and exiting the business, you’re likely to benefit from lower rates of capital gains tax. If this is a short-term goal, consider holding off on declaring any excessive dividends and retain profits in the company to benefit from lower rates of tax on sale.
- Get Your Personal Affairs in Order
Have you made appropriate arrangements for succession of the business and have you quantified and catered for any potential inheritance tax liabilities arising upon your passing? By making such arrangements as key-man insurance policies and keeping an up to date will, you can ensure the business is protected on your passing. Effective inheritance tax planning can ensure your descendants are not left with unexpected tax liabilities.
While we hope this gives you food for thought, tax planning should not be undertaken without taking the appropriate advice. Anyone wanting to discuss any of the points raised above can contact a member of Shorts’ tax team for a free initial consultation by calling 0114 2671617 or emailing info@shorts.uk.com
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David Robinson
As a Tax Partner, I advise clients on all aspects of UK tax, ranging from business taxes, transactions and private client matters, helping to achieve the objectives and aspirations of businesses and their owners.
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