Incorporation Tax Advantages

Whether you are a sole trader or in partnership there could be tax savings if you transferred your business to a company.

Not only can incorporation mean that you pay lower corporation tax on your business profits and keep more of your earnings it also presents a number of interesting tax planning opportunities.

This is especially topical as we have the introduction of 50% income tax from 6 April 2010.

For example if your business has valuable goodwill or other assets that would be chargeable to capital gains tax you might consider an incorporation that involved you selling such assets to your company and paying 10% tax now. This could then give you the ability to withdraw capital from you company in the future and avoid the 50% income tax rate.

Alternatively you may wish to consider splitting income to use your spouse or civil partners lower rates of income tax and/or their annual tax free personal allowance.

Of course there are many factors to be weighed in each case, the decision to incorporate needs to be considered carefully and in practice it doesn’t happen overnight.

If you are interested, please let us know and we can arrange without obligation to meet for an initial discussion.