Business tax planning

In any type of business, tax planning is important if profits are to be maximised. Although large companies probably benefit most from tax planning, businesses of all sizes will almost certainly get some benefit.

Tax is a very complicated subject and an expert’s advice should be sought when tax planning. The different types of tax that a business is subject to vary depending on how the business is classified; for example, a partnership pays different taxes to a company. A company pays corporation tax on its trading income and capital gains. Working out how much tax a company should pay is a daunting task and even more daunting is planning disposals, lending or share distribution to minimise tax payments. The complexity of corporate tax planning means that instructing an expert or group of experts to assist is highly advisable.

Business tax planning for partnerships is also complex. Although an individual partner will pay tax on income and therefore pay tax on the profits of the business in that way, paying tax can become more complex when partners leave the partnership or join it. To add to the complexity, the partner will be subject to capital gains tax, but may be entitled to certain business reliefs and should receive relief on some borrowing.

Taxation of a sole trader is perhaps the least complicated of all the business tax planning, though it is still advisable to obtain advice as there are reliefs available that can be offset against the income from the business, allowing the sole trader to pay less tax.

If you would like to obtain legal advice on business tax planning, Contact Law can put you in touch with a local specialist tax solicitor free of charge. So, if you have any questions or would like our help in finding local tax solicitors please call us on 0800 1777 162 or complete the web-form above.