Tax Efficient Remuneration

24th January 2016
  • Examining whether it is best to run the business as a limited company or otherwise (sole trader, partnership or LLP),
  • If operated as a limited company:
    • Looking at the combined business and personal tax ‘picture’ and optimising the mix of retained profits, salary, bonus and dividends (for the business owner and, where relevant, immediate family members). In order to direct dividends tax efficiently, it may well be appropriate to create a structure with ‘alphabet’ shares,
    • Where the business occupies premises owned personally, comparing the income taxcapital gains tax and inheritance tax issues of whether or not to charge a rent,
    • Maximising receipt of tax free benefits in kind (either as additional remuneration or via a salary sacrice scheme),
    • Examining whether it is acceptable and appropriate to receive taxable benefits in kind,
    • 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,

    As well as structuring remuneration to be tax efficient, we are mindful that there are often other drivers behind this process:

    • Linking financial reward to actual performance, to motivate key individuals,
    • Making sure that the remuneration split assists with, and does not jeopardise:

Related Services

Payroll Tax Planning


 
Other items in Blogs
 
Jodie Tarbin
23rd July 2019 Residential Property Tax News!

  Lettings Relief and Principal Private Residence Relief   Following my previous blog regarding the changes announced to the Principal Private Residence Relief (PPR) and lettings relief rules, the consultation period ended on 1 June 2019. You can view the consultation responses here.   HMRC have now published a policy paper on 11 July 2019,…

Read More »

Fiona Mann
22nd July 2019 Exam Success – World Beating Results!

  We’ve had some extraordinary exam results over the last few days – staff at Whiting & Partners have excelled themselves. Luke Bacon from St Ives office has achieved an outstanding result of 99% for the Financial Accounting and Reporting exam – coming joint first in the world.  This result has been recognised by the…

Read More »

Matilda Mawson
19th July 2019 Changes to Entrepreneurs Relief from 6 April 2019

Entrepreneurs’ relief allows a reduced rate of capital gains tax on disposals of all or part of your business assets. The reduced tax rate is 10% on up to £10 million of lifetime gains. There have been a number of significant changes to entrepreneurs’ relief in the last year, tightening the rules on qualifying conditions…

Read More »

Ernesta Petkeviciute
19th July 2019 New SRA accounting rules – what’s changing?

The current Accounts Rules are made up of over 40 detailed requirements, making it difficult for firms to fully understand what is required of them, as well as giving firms no flexibility to adapt them to their own practices and decide how best to look after client’s money.   The new rules coming into effect…

Read More »

Vanessa Pearson
15th July 2019 IR35: private sector off-payroll rules for contractors

This week HMRC have published draft legislation that will affect private sector personal services companies (PSCs)  from 6 April 2020. PSC’s supplying services to medium or large-sized organisations will no longer decide if they are employed or self-employed, the end engager will assess this. If caught by these rules, known as IR35, employment taxes and…

Read More »

Paul Jefferson
15th July 2019 Company car tax changes – Government will remove BIK company car tax on Electric Vehicles from 2020/21

The government has provided positive news for Company car drivers announcing that a pure electric vehicle (EV) will no longer pay benefit-in-kind (BIK) tax in 2020/21 following a review which looks set to boost sales of emissions-free cars. HM Treasury’s response to its review of the fallout from the roll-out of the Worldwide Harmonised Light…

Read More »