Tax & VAT
The UK tax system is complex and is constantly evolving, and it can be something of a challenge for today’s busy business owner to ensure that their venture is operating as tax-efficiently as possible.
At Kirk Hills, we have a proven reputation for working alongside our clients to offer up-to-date, proactive advice on all areas of taxation, including a range of legitimate strategies to help minimize the tax bill.
VAT can be a particularly complex area of taxation, with a range of special rules applying to small businesses. We can help to guide you through the maze, offering assistance with all areas of VAT planning, from dealing with VAT registration to helping with the completion of VAT returns.
To find out more about how Kirk Hills can help to reduce the burden of taxation for you and your business, please contact us today.
This is usually the hardest tax to save. However, profits in a limited company pay tax at 20% but individuals pay up to 45% so if you can leave profits in your company this is a good way to save tax. One simple way to save tax is to make pension payments. Another is to set up a business so that the key staff can be remunerated in part by dividend rather than salary.
We do not want to give away too much here but we have helped clients reduce their income tax to 0% by using the tax rules legally to their advantage.
The best tax saving here is Entrepreneurs Relief (“ER”). Sales of business assets where you own over 5% of the business and are a director mean you only pay CGT of 10% after one year of ownership. This is on the first £1 million of gains.
Another tip to mitigate CGT completely is to emigrate before an asset sale and not return for at least one year after the sale. There are strict rules about timing and clearly, enough tax has to be saved to make this worthwhile. There will always be issues about leaving family and friends behind but there are fast track ways of emigrating.
One great way to save tax on a business is to start it with others as an Enterprise Investment Scheme company – tax relief on investment and no CGT after three years is an attractive proposition. Another example is to split a company into four that had £50 million of assets so each sibling had one quarter. No income tax, CGT, CT or even stamp duty using a section 110 Scheme of Arrangement. Of your CGT planning needs, helping to ensure that you minimize the impact of CGT and retain as many of the proceeds as possible.
VAT is, in essence, a simple tax…
However, special rules can apply to small businesses which may serve to reduce their administrative burden and their VAT bill. Certain businesses can take advantage of schemes where VAT is only paid on profit margins.
Where a business sells a mixture of vatable and non-vatable items, the partial exemption rules may apply. In respect of buildings and construction, there are many unusual and different rules. These issues contribute to the complexity of VAT. We provide advice on all areas of VAT, as well as assisting clients in preparing their VAT returns.
This is an easy tax to mitigate but forward planning and recording are required.
For example, business assets owned for two years before death including non-listed shares in a trading company are exempt from IHT. So are working farms and hotels, pubs and other property backed businesses – which are obviously attractive as they are fairly safe asset classes. The conversion of non-business assets into business assets is, therefore, a prime consideration.
Another simple planning tool is to use gifts – survive seven years after a gift and pay no Inheritance Tax at all. There are many such simple planning strategies that can be used.
We believe that we can help you reduce your tax bill. In fact, we offer to undertake a review of the affairs for each new client and if we can’t, we won’t charge you for that work.
Tax saving is broadly split into the following areas:
- Reducing taxes on income
- Reducing or eliminating taxes on business acquisitions or disposals
- Reducing or eliminating inheritance taxes
We have various legal tax saving schemes (that are not registerable as DOTAS schemes*) that all involve planning in advance, not after an event.
Is it possible to pay no tax?
Surprisingly, yes, it is possible. The key lies in effectively structuring a transaction.