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1 October 2009

With Chris Mattos, Tax Manager for Hazlewoods LLP

Most of the focus during 2009 has centred around cash flow management with tax mitigation taking a back seat..  However, now that we are hearing positive noises regarding the economy, serious consideration should be given to one of the 2009 Budget announcements. 

The Chancellor proposed that from 6 April 2010 a new “super” rate of tax at 50% will be introduced.  Potentially this will see a rate of 51.5% on income over £150,000 together with an effective rate of 61.5% due on incomes between £100,000 and £113,000.

It is possible to mitigate the exposure to the new 50% rate by careful organisation of your affairs. However, this action needs to be considered during the current tax year. There a variety of different tax planning techniques that can be used, ranging from those that look at the timing of expenses and remuneration of the business owners to more complicated changes to the structure.  The list below is by no means extensive but is an example of the ideas that can be considered:

  • Planning the timing of dividend payments
  • Changing the year end of a business
  • Bringing spouses into the ownership of a business
  • Capital allowance planning including not making claims in certain circumstances
  • Maximising the tax relief of pension contributions
  • Reviewing business expenses to avoid incurring expenditure that is not tax deductible
  • Reviewing the business structure to determine if there is any benefit in using limited companies and / or LLPs
  • Using tax planning schemes that have been developed in association with Queen’s Counsel
Whilst some of the above ideas may work in your circumstances others will not, it is important that careful consideration is given to your tax affairs before implementing a technique.
For more details of the above tax planning techniques please contact Chris Mattos on 01242 237661 or email chris.mattos@hazlewoods.co.uk