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TAX ,TAX, TAX. We all want to minimise it

Your favourite Manchester accountants Blondies are advising high earners facing the prospect of the 50% rate of income tax. Reduced pension tax relief, aggravated by increases in National Insurance contributions, makes it crucial that s action be taken now to pre- empt this an reduce their future taxation. Blondies Manchester accountants have reviewed many tax scenarios in the light of the pending taxation changes, and have quantified many ways of extracting value from a business entity (or entities), which have differing levels of taxation.

Extrapolations need to be made for individuals personal circumstances, whether incorporated or sole trader. So that the crucial decisions of the optimum levels of remuneration via dividend, paye, drawings or bonuses can be made with all the factual projections to hand.

Generally speaking, the recent changes to personal taxation mean corporate and capital taxes are now substantively lower than income tax/paye. Your friendly Manchester accountants can help you decide whether an alternative method of receiving income is more effective for you and yours.

It may be beneficial to bring income forward, defer certain expenditure, and re-structure investments to realise capital rather than income.

Personal tax levels are now returning to the highest levels since the 1970’s. And you need to be forward planning now to minimise the effects of these changes.

We at Blondies Manchester accountants are always happy to help.


It is widely accepted that paying Company dividends from profits is more tax effective than paying a bonus to owner-managers, but there are times when this is not so.


One must consider the pro rata split of the shareholding if there is more than one shareholder and the personal circumstances of the other ordinary share holders. Shareholders receive dividends at a pro rata rate on the number of shares held, although of course there is always the option, if agreed, of some shareholders signing a “waive” of their dividend. The problem with this is of course, we must not fall foul of Tax avoidance rules. Blondies manchester accountants will be happy to guide you on this.

If paying the “Bonus route” with prima facie higher tax PAYE – then we can look at the option of paying bonus or part bonus to working spouse or relative “working” for the company.

The uniformity of payment in respect of dividends also does Not apply to bonuses , so a family member with low tax liability, who actually does not do much for the Company, can still receive a very high “bonus”.

If a close relative or trusted employee, shareholder or director is retiring or leaving after long and / or valuable service – there is still the option of paying to them a wholly TAX and NIC free bonus of £30000 (Thirty thousand pounds) or more – provided the company minutes justify this Tax and NIC payment.

Tax Exiles – recent Court ruling.

Blondies manchester accountants wish to highlight that wealthy UK citizens who believe they live abroad and can avoid UK taxes by spending fewer than 91 days in the UK, may now find that they will have to pay back taxes now.

 

A judge recently upheld an application against a businessman who “resided” in the Seychelles since 1976, and ensured that he did not spend more than 90 days a year in the UK.

The main reason that the Judges awarded in favour of HMRC was that that Mr Gaines-Cooper could not prove that he had cut all ties with his home and country. He still kept on an Oxfordshire home and had close ties with family and friends in the UK.

Therefore by complying with the 91 day rule alone, you cannot claim non residency for tax purposes.

Mr Gaines-Cooper now faces up to Six years back taxes!! Because you must show beyond any doubt that you have really left the country.

If Mr Gaines-Coopers appeal fails – then approximately six million “tax exiles” who believe they have proved they are “living abroad” , like Mr Gaines- Cooper, may well be facing up to six years back taxes.

Full information and guidance is available from Steve Bosanko at Blondies accountants manchester.

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