Preserving your business income

4th September 2018

It’s the holiday season, many will have recently been or soon be travelling abroad. As well as marvelling at the sights, we will also be struck by how these countries are run, and compare them to life back in home.   It is easy to be jealous of:

  • State pension levels in Sweden
  • Police numbers on Rome’s streets
  • Attainment levels of schoolchildren in Japan
  • Cuba’s healthcare system

Public sector services and social security systems obviously come at a cost, funded primarily from taxation. So, as we aspire to improve our own, it’s interesting to see just how deep into their pockets our neighbours are prepared to dig, to provide this funding.

2015 national tax to GDP ratio:

  • Japan 31%
  • UK           32%
  • Greece 36%
  • Germany 37%
  • Sweden 43%
  • France 45%
  • Denmark 46%

So, the UK public purse is smaller than many of our obvious peers, perhaps as you would expect from the current colour of Government. In the present tide of promises for increased funding for the NHS, social care and public sector pay increases, one could be forgiven for speculating that tax rates will soon rise. The Budget is under four months away and there is already speculation around its content.

Future rate cuts in Corporation Tax could be axed, the new public sector IR35 rules could be extended to private sector contractors, NIC rates linked to NHS funding and a reduction in the VAT registration threshold.

It is an unspoken rule of business that you generate income and value through the business, and then convert this into personal wealth, where you try to both, preserve it and live off it. So perhaps now is a good opportunity to undertake some of this ‘conversion’, whilst the tax costs are relatively modest?



 
Other items in Blogs
 
Vanessa Pearson
13th December 2019 April 2020 Proposed IR35 changes: Status appeals process

As the planned changes to who determines IR35 status are fast approaching, contractors would be well advised to review their contracts on HMRC’s updated CEST (Check Employment Status for Tax) tool. Having provided answers to questions regarding substitution, control and nature of the work, the updated tool will give HMRC’s view of the workers employment…

Read More »

Ben Kilby
12th December 2019 VAT Surcharge

Have you or your business received one between 23 April 2018 and 31 January 2019?   If so, you may want to check if it has been dated. If it has not been dated you may be in for a refund. Any surcharge liability notice or surcharge liability notice extensions are invalid if they have…

Read More »

Lucy Bayliss
25th November 2019 Don’t let your tax bill affect your festive joy. Instead, spread your tax payments throughout the year!

With the festive period fast approaching, it is easy to lose sight of your self-assessment tax return!   If you are employed or receiving a pension and you file your return before 30 December 2019, you can elect to have your tax collected through ‘Pay As You Earn’ (PAYE) rather than paying one lump sum…

Read More »

Ian Piper
22nd November 2019 2019 Growth: Missing in action?

(Data Source) As another year draws to a close, local SME businesses will be forgiven for looking forward to drawing a line under it. With 2019 sales growth barely nudging 1%, it has been a year of focusing on not slipping backwards, rather than the usual mantra of continually signing up new accounts.  When commentators…

Read More »

Mark Burrows
21st November 2019 Avoiding Self Assessment Tax Scams

HM Revenue & Customs have reminded Self Assessment taxpayers to watch out for fraudsters as the tax return filing deadline of 31 January approaches.   HMRC say they have received nearly 900,000 reports of suspicious phone calls, texts or e-mails from scammers pretending to be the tax authority.  Most of these messages were about fake…

Read More »

Scott Bishop
20th November 2019 Postponement of planned Corporation Tax reduction

Boris Johnson has announced plans to postpone the cut in Corporation Tax to 17% (down from 19%) that was due to take effect from 1st April 2020 in order to save £6bn, stating that the money would be better spent on other ‘national priorities’,  including the NHS.   It is not clear when, or indeed…

Read More »