Are you ready for the 50% tax rate?
The 50% tax rate on income over £150,000 will be with us in just over 8 months. You cannot change the inevitable, but it is worth looking at what you can do to mitigate the impact, for example:
- the maximum rate of tax in a company is only 28%. Incorporation planning is only sensible if cash in the company can be accumulated and extracted as capital on cessation.
- investing for capital growth, taxed at 18%, rather than for income.
- consider the timing of payments.
- claim any available losses.
- unincorporated businesses may already be earning income taxable at 50% (due to the way the basis periods work). Should you change your accounting period end?
It may be possible to plan to mitigate the increase in higher rate of tax but action should be considered now.
If you need any help please contact us.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author.
Date: 17th July, 2009
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