Corporation Tax Planning

Extracting profits in the most efficient manner possible is important to all business owners. Often, the traditional mix of salary and dividends is used where there are insufficient director’s loan accounts to draw upon.

While salary and dividend combinations extract profits, they both carry potentially significant tax charges on a personal and corporate level:

Salary and Bonuses

The potential tax burden can reach 57.82%.

Assumes Corporation Tax is reduced or extinguished and also a 50% marginal rate of Income Tax.

Dividends

The effective dividend tax charge will be 36.11%, coupled with a potential Corporation Tax liability of 27.50%.

Assumes marginal rate of corporation tax where profits are £300,000 – £1,500,000 and also a 50% marginal rate of Income Tax.

Benefits of Corporation Tax Planning

It is possible to extract up to 90% of your profits with this planning strategy. Effectively, you will pay 10% in planning fees, depending on the level of contribution to the strategy.

This planning mitigates:

• Corporation Tax
• Income Tax
• National Insurance
• Inheritance Tax

Any funds eventually placed in the trust structure can potentially grow free from Capital Gains Tax.

This planning is a very powerful tax mitigation strategy which our advisors are happy to discuss in greater detail with you, aiding your personal and corporate wealth planning. For more information please contact us