- If the UK company taxable profits are £300,000 or less, a stand-alone company will normally pay corporation tax at just 21% (‘small companies’ rate’).
- This small companies’ rate reduces to 20% with effect from 1 April 2011.
- The standard rate of corporation tax is 28%. It will be reduced to 27% with effect from 1 April 2011 and there are plans to reduce it by 1% each year until the main rate is 24% by 2014. This rate applies to ‘large companies’ or those with taxable profits of £1.5m+ if stand-alone.
- Company structure allows for cash to be rolled up with low(ish) rates of tax suffered – see points 1 and 2 above.
- Corporation tax is not payable until 9 months after the end of the accounting period for the majority of companies.
- R&D tax credits and other tax incentives are available for innovative companies.
- Remuneration strategies can be managed to optimise the personal tax position of investors and business owners.
- Investors in unquoted companies can obtain income tax relief on their equity investment e.g under Enterprise Investment Scheme (EIS).
- Shareholding investments in unquoted trading companies can attract 100% relief (exclusion from your estate) for inheritance tax purposes.
- Key employees can be incentivised through HM Revenue & Customs approved share schemes such as the Enterprise Management Incentive Scheme (EMI).
- Income on UK patents could be subject to a lower rate of corporation tax at just 10% (although unlikely to be introduced before April 2013).
- Companies within a corporate group (minimum of 75% common ownership of parent company) can shelter current year tax losses against taxable profits of other group companies.
More to come…
