Articles – Page 2 – Numbers UK Ltd

May 16, 2014 by Owen Jones 0

How do I pay a dividend?

Introduction Director/shareholders of privately owned companies have long been able to reduce their tax and NIC bills by adopting a remuneration structure consisting of a low salary, topped up with dividend payments. The attraction A typical family company might make £50,000 a year in profits. At this level, the combined income tax and NIC bill would exceed £13,300. Running the business as a limited company would cut the tax on business profits to less than £8,500. The saving of over £4,800 could be used to enhance the living standards of the owner’s family, reduce the length of their working week, or provide funds for investment in the business. So what has changed? On 13 April 2013, HMRC announced that PA Holdings had abandoned its appeal in a complex tax avoidance case, involving the payment of dividends. It also announced that there was no change in policy towards OMBs and their…

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April 25, 2014 by Owen Jones 0

Articles

Mixed partnerships – a thing of the past?

Introduction Mixed partnerships have been a good way in which to retain the benefits of self-employed status for business owners, while reducing the tax burden on businesses. While there have been some attempts to limit the benefits (e.g. the ban on mixed partnerships getting the 100% AIA for plant and machinery investment), HMRC have been unable to upset the arrangements. Until now….. It was announced in the 2013 Autumn statement, and draft legislation issued shortly thereafter, to close down what HMRC describe as a structural weakness that has allowed businesses to artificially reduce their tax liabilities. However, there are some very good reasons for having a mixed partnership. For example, retaining post-tax profits in a partnership will have incurred income tax and NIC if taken from the individual partners own profit share. This could reduce the available capital by up to 25% compared to funding it from a corporate partner’s…

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