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The Big Picture
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Tax
Efficient Remuneration
As tax rules continually change, we would recommend
that, for key employees, remuneration structure is periodically
reviewed to ensure that it is both tax efficient and motivational.
When undetaking such a review for clients, we would
typically consider the following:
- For owner managers, reviewing the mix of salary, rent, pension
contributions and dividends. This exercise needs to be undertaken
in light of HM Revenue & Customs current view on 'income shifting' (taxing
dividends received which are disproportionate to either the
capital investment made by the shareholder or the involvement
of the shareholder in the business).
- Whether it is better for cars to be owned and expensed by
the company, by employees personally, or by a separate unincorporated
service business,
- Whether company car tax could be reduced, without unacceptably
prejudicing choice, by changing the vehicle to:
- A lower CO2 emission car,
- A classic car (aged over 15 years old and now worth less
than £15,000),
- A van (including some twin cab pick-ups),
- A pool vehicle.
- Whether it is cheaper for employees to reimburse the company
for the full cost of privately used fuel, or suffer the tax
charge on the fuel benefit in kind,
- Whether the NIC savings for both the employer and employee
make it attractive for the employer, either, making contributions
directly into the employee’s pension scheme, providing
the employee with childcare vouchers or introducing a cycle to work scheme, in exchange for a contractually
agreed salary sacrifice.
Other Practical Examples of our Remuneration Planning Expertise
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