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How to save Tax as a Business

How a business is structured can literally mean the difference between its success or failure and is at least as important as the individuals/entrepreneurs behind the business itself. In the United Kingdom and Ireland, there is a general pro-business approach especially for business start-up's with the former having a small companies rate of 20% (£0 to £300,000.00) and the latter between 0% and 12.5% for trading non-passive companies. In addition, in the UK there are generous entrepreneurs' relief dispensations from capital gains, which amounts (at the time of writing) to £10,000,000.00 during an investor's lifetime. However, notwithstanding the relatively favourable business tax environment personal income tax levels (even for relatively modest earners) are still very high whilst corporate capital gains can be an impediment to growth.

Factors to Consider

The potential factors to consider when setting-up or indeed expanding a business are highly variable and cannot be set-out in any clear manner given the vast number of business types, personal circumstances etc. However, general considerations would generally include:

  • Is the business totally domestic or are there international aspects to it?
  • Is there intellectual property that might have a future significant value?
  • What is the domicile/residence situation of the owner(s)/investor(s)?
  • How is the business being financed?
  • What are the long-term objectives?
  • How are competitor companies' set-up and can an advantage be created by using tax
  • planning methods?

UK Corporate Tax Rates (2013-2014)

Small companies rate (£0 -£300,000,00)

20%

Larger companies rate (£1,500,001.00 plus with marginal relief between £300,001.00 and £1,500,000.00)

23%

Corporation tax payments

  • Small companies: tax due 9 months and 1 day after the end of the accountancy period
  • Larger companies: tax due in quarterly instalments from 6 months and 13 days after the start of the accountancy period

Value Added Tax Rates (2013-14)

Standard rate

20%

Registration level

£79,000.00

De-registration limit

£77,000.00

For more information on SCF international accountancy services please contact an SCF Consultant

* Sourced from HMRC