Tax mitigation

In 2015, the Government announced legislation for a more competitive Corporation Tax system. It was a key element in creating the best conditions for business investment and growth. As a result, Corporation Tax dropped to 19% in April 2017 across all profits with no differentiation between bands.

However, from April 2023 Corporation Tax for larger companies rose to 25%, with the 19% rate still applying to companies with taxable profits of £50,000 or less.

At the same time, new anti-avoidance legislation will identify companies that seek to exploit loopholes in Corporation Tax legislation.

This follows the general trend against what are deemed aggressive forms of tax mitigation.

Tax planning

The recent changes in corporation tax and dividend tax have impacted the efficiency of certain remuneration structures. Whilst dividends will remain tax efficient for many directors, it is important to review your remuneration structure in light of the recent changes.

However, it’s important for a director to draw sufficient remuneration to retain entitlement to state benefits. You can achieve an even lower effective rate of income tax by a combination of salary dividends and pension contributions.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances.

Got a question?

If you would like to speak to us about a particular issue or wish to find out more about the specialist advice services we offer for business owners, please get in touch.