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Slash Your Tax for Small Businesses - 4. How business profits are taxed - 4.9. How an individual is taxed - 4.9.13. What’s the relevant dividend rate? - 2016/17 onwards
2016/17 onwardsThe taxation of dividends was overhauled with effect from 6 April 2016. Dividends paid after that date are not grossed up, and there is no notional 10% tax credit. The first £2,000 of dividends do not suffer any tax charge, as they are covered by the “dividend allowance” - which is really a 0% starting rate (it was £5,000 for 2016/17 and 2017/18). Dividends still form the top slice of income in the tax calculation, so any dividends falling within this allowance use up part of whichever...Click here -
Slash Your Tax for Small Businesses - 1. Starting up in business - 1.1. Core questions - 1.1.1. I’m thinking of starting a new business. What tax issues do I need to think about?
1.1.1. I’m thinking of starting a new business. What tax issues do I need to think about?The first tax-related issue that you need to consider is what form the business should take. Will you run the business through a limited company or as an unincorporated business?You also need to think through your longer-term objectives for the business and keep them in mind.Click here -
Slash Your Tax for Small Businesses - 2. Aspects of incorporation - 2.1. Core questions - 2.1.1. Should I run my business as a sole trader/partnership or through a limited company?
2.1.1. Should I run my business as a sole trader/partnership or through a limited company?This is ultimately up to you. There are currently tax advantages of operating through a limited company, though some of these were curtailed from April 2016.If it will just be you, your choices are between operating as a sole trader or through a limited company. If there’s more than one of you (perhaps your spouse or partner can be included in the business - this could give a tax benefit) your choices are between...Click here -
Slash Your Tax for Small Businesses - 2. Aspects of incorporation - 2.2. Whether to incorporate - 2.2.1. What are the advantages of running a business through a company?
2.2.1. What are the advantages of running a business through a company?Broadly speaking, the rates of tax that a company pays are less than those paid by an individual, although the company’s profits will sometimes be taxable again when withdrawn by the individual.Additionally, by operating as an unincorporated business, an individual has to pay Class 2 and Class 4 NI. With an incorporated business however, it is possible to avoid NI and minimise the effects of paying tax both in the company and personally.Click here -
Slash Your Tax for Small Businesses - 2. Aspects of incorporation - 2.3. How to incorporate an existing business - 2.3.2. What if there are significant assets to transfer?
2.3.2. What if there are significant assets to transfer?If there are assets in the business (including goodwill) which are chargeable assets, you will be treated as if you sold them to the limited company for their market value and a capital gains tax (CGT) liability may arise. This potential liability can be mitigated using one (or perhaps more) of these reliefs:incorporation reliefholdover relief; and business asset disposal relief (previously called entrepreneurs’ relief).The availability of these reliefs...Click here -
Slash Your Tax for Small Businesses - 2. Aspects of incorporation - 2.4. Disincorporation - 2.4.1. How can I disincorporate my company business and carry it on as a sole trader or in partnership?
2.4.1. How can I disincorporate my company business and carry it on as a sole trader or in partnership?It depends. If the business is just you, and there are no significant assets to transfer, you can just cease trading in the limited company and start trading as a sole trader or in partnership.However, if the business has significant assets, you may wish to transfer them to the shareholders to allow them to continue to run the business in an unincorporated form. If these assets are standing at a gain,...Click here -
Slash Your Tax for Small Businesses - 3. The longer term - succession planning and selling the business - 3.1. Core questions - 3.1.1. What do I need to think about for my business in the longer term?
3.1.1. What do I need to think about for my business in the longer term?When you’re running a business it’s always as well for tax purposes to keep in mind what will happen to it in the longer term:will you sell it eventually? Or are you essentially the business so it will just cease when you decide to retire or move on to something else?perhaps there will be parts of the business that you can sell and parts that are personal to you, or that you want to keepis it a family business that you will want...Click here -
Slash Your Tax for Small Businesses - 3. The longer term - succession planning and selling the business - 3.2. Selling a business personally and liquidating companies - 3.2.1. How might I sell my business?
3.2.1. How might I sell my business?If the business is run through a company, you can either sell your shares or the company can sell the business. If the business is unincorporated, it’s likely to be a straight sale unless you incorporate it with a view to making a sale. If you do, be aware that you could lose BADR unless you hold the shares for two years before the sale.Click here -
Slash Your Tax for Small Businesses - 3. The longer term - succession planning and selling the business - 3.3. Selling a business from a limited company - 3.3.1. How might my limited company sell a business?
3.3.1. How might my limited company sell a business?As is the case of an individual trading alone, a limited company might simply sell its trade and business assets, but the shareholder will retain their shares. Alternatively, it might first transfer the business to a subsidiary company.If the shares are sold in a trading subsidiary, the holding company’s chargeable gain may be exempted from being chargeable to CT by the substantial shareholdings exemption.If the business is sold, chargeable gains will be...Click here -
Slash Your Tax for Small Businesses - 3. The longer term - succession planning and selling the business - 3.4. Preparing incorporated businesses for sale - 3.4.2. What’s a gains group and what’s a degrouping charge?
3.4.2. What’s a gains group and what’s a degrouping charge?A gains group is a group of companies where the parent company in the group owns at least 75% of its subsidiaries and they in turn own at least 75% of their subsidiaries, and so on down the group, subject to the parent at the top of the group having an indirect interest in any company further down the group of more than 50%.ExampleDozy Limited owns 80% of Beaky Limited. In turn Beaky Limited owns 80% of Mick Limited. Mick Limited also has a subsidiary...Click here
1 to 10 of 57 articles