View more on these topics

Corporate planning opportunities: Gareth Marr, Advisory and Brokerage Services

The corporate IFA will concentrate on the planning opportunities around National Insurance and corporation tax changes.
With the new nil rate band on profits up to £10,000 there are now five different rates of corporation tax.

Profits Rate
£0 – £10,000 0
£10,000 – £50,000 22 per cent (estimate)
£50,000 – £300,000</TD 19 per cent
£300,000 – £1.5m 32.5 per cent
more than £1.5m 30 per cent

The main ways to mitigate corporation tax is to pay earnings or pension contributions. The IFA should therefore concentrate on helping owner/managers of businesses to firstly reduce profits below the two marginal rates of 22 per cent and 32.5 per cent, and then aim to get profits below the £10,000 level.
It is assumed the client will be taking earnings anyway so the advice will focus on what should be done with the &#39extra&#39 profit above directors normal earnings.
A look at some of the options should point the way.

Option Tax Cost
Pension payment 0
Bonuses, after higher rate tax employer and employee NI contributions 53.9 per cent
Dividends</TD 40 per cent
Dividends is profits below £10,000 25 per cent
Pay non-earning spouses up to nil rate band 0
Pensions for spouses 0

Obviously this is just a snapshot and needs to be taken on reducing pensionable earnings that might reduce benefits. One final thought &#45 for the seriously successful entrepreneur client forget income and pensions and just concentrate on building businesses and selling them in three y ears &#45 effective tax rate of 10 per cent.

Gareth Marr is chief executive of Advisory and Brokerage Services

Recommended

Old Mutual Fund Managers – UK Select Large Cap Fund

Tuesday, 16 April 2002 Type: Unit trust Aim: Growth by investing in FTSE 100 and mid cap companies Minimum investment: Lump sum £1,000, monthly £50 Investment split: FTSE 100 90%, mid cap companies 10% Isa link: Yes Pep transfers: Yes Charges: Initial 4%, annual 1.25% Commission: Initial 3%, renewal 0.5% Tel: 0808 1002715

The state of the nation&#39s savings

The body renowned for checking that the Chancellor gets his sums correct -the Institute for Fiscal Studies is to launch a huge rolling survey of the British public&#39s levels of pensions,savings and home ownership.The survey every two years, which will cover 13,000 people, could well become a sort of national fact-find. With a meaningful benchmark […]

Family tax credits

The Chancellor has proposed that two new tax credits – the Child Tax Credit and the Working Tax Credit – will be introduced from April 2003. In summary Child Tax Credit will combine all income-related support for children and will be paid direct to the main carer, usually the mother, creating one system of support […]

Advisers must respond to CP121

After reading through CP121, I am at a loss as to what the future holds for our profession.The FSA says in CP121 that the majority of consumers have restricted access to independent advice. It also mentions that consumers do not shop around between advisers and their choice of adviser is driven by trust and not […]

Generation Rent

By Denise Wond, marketing manager We’ve heard a great deal about Generation Rent in recent years but what does it actually mean for consumers and advisers and has the face of the typical renter changed? The picture is certainly more diverse than it used to be. Homeownership is at its lowest point in 30 years, […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com