Leadership race means more tax uncertainty for owner managers
How is the scramble to replace the Prime Minister causing uncertainty for small company owners?
The main rate of corporation tax is currently due to increase to 25% from April 2023. This, coupled with the increase in the NI and dividend tax rates, has eroded the tax benefits of small business incorporation considerably. As a result, many small company owners have been considering their options, including bringing in a spouse or civil partner as a second shareholder, or disincorporating to transfer the business to a sole trade or partnership.
However, the position is now unclear. Several of the leadership candidates have made tax-related pledges, including scrapping the forthcoming rise, reversing the NI rate hike, and even cutting corporation tax. As a result, our advice is to delay making any decision on whether to disincorporate etc. until the leadership contest is over. The position should then become clearer relatively quickly. This is especially true if disincorporating would trigger tax charges.
Related Topics
-
Should you voluntarily payroll benefits in kind?
The window to sign up to voluntarily payroll non-mandatory benefits in kind for 2027/28 will open in November. Is it worth volunteering to pay HMRC earlier than required or should you wait until it becomes mandatory in 2028/29?
-
Wise tax statement errors could affect 4,000 customers
Around 4,000 UK customers of financial services provider Wise have been told that tax statements issued between 2021 and 2025 contained incorrect figures. The errors could have resulted in taxpayers paying too much or too little income tax and capital gains tax (CGT). What should affected customers check?
-
CT61