• Corporation Tax
  • Inheritance Tax
  • Capital Gains Tax
  • SDLT
  • Income Tax
  • EFRBS
  • QROPS
 
CORPORATION TAX PLANNING:
 


Introduction:

When a Limited Company makes a profit, it is normally a simple fact of life that there will be tax to pay. Many company owners have to decide on what to do with the profits. Options are:

- Leave them in the company and pay the corporation tax (Rates vary between 21% - 28%).
- Take them as an increased salary/bonus (HMRC will benefit MORE than you do, especially when the 50% high rate of income tax is applied).
- Take them as a Dividend. (But still pay the Corporation Tax and additional Income Tax).

But now there are some more options open to Company Director's:

  • Use our EFRBS Planning and extract funds from the company (paying 0% Corporation Tax if carried out correctly)
  • Undertake one of our HMRC Approved "Corporate Investments" that retain funds within the business while at the same time reducing exposure to corporation tax. (28% down to 21% - with a possible income to repay some/all of the 21%)
  • Use the "Corporate Investment" to save tax, then use this saving to set-up a specific type of "Corporate Trust" - which can be used as an investment shelter (0% CGT) or to provide access to tax efficient loans.
  • Use our planning to sell shares to a special structure and ONLY pay tax at 10% on the gain made.

We are also experts on the use of EFRBS (Employer Funded Retirement Benefit Schemes) and can show you how to use these as part of your overall planning process.

 

Corporate Investment - Overview:
By making an investment into a special LLP, the company can claim significant year 1 tax concessions (s.393A ICTA 1988) - and at the same time, look forward to an income stream from the LLP in years 2-5. The providers of the LLP have a very a strong track record and have raised many hundreds of millions in this way.

HMRC seem content with the accounting and taxation aspects of the investment, as they will be getting a stream of tax from the ongoing profits of the LLP.

The following is a simplified cashflow forecast:

Case Study - ABC Limited with £1,500,000 Taxable Profits:
  Without Investment With Investment
Year 1 Profits £1,500,000 £1,500,000
Total Capital Invested into LLP £0 £259,048
Accounting Loss Arising from investment
(Which does not involve any loans to "gear up" as with some arrangements on the market)		 £0 (£1,200,000)
Taxable Profits £1,500,000 £300,000
Corporation Tax (28/21%) £420,000 £63,000
Distributable Cash £1,080,000 £1,177,952
Years 2-5 Post Tax Profits from Investment
(Full details of how this has been calculated will be provided within the official Information Memorandum on request)		 £0 £101,333
The savings can be used to fund a number of other "Planning" opportunities - such as Trusts or Contracts.
(MIN SHELTER = £550,000 of Taxable Profit)


 

(C) Corporate Consulting (Taxation) Ltd. Reg Company Number 06592789. Suite 12577, 145-157 St John's Street, London, EC1V 4PY.