HB Accountants

October

The tax rate hike and what you can do now

From 6 April 2010 tax is going up to 50% on income in excess of £150,000. As if that isn't bad enough, the rate will actually be 60% on income between £100,000 and about £113,000. This is because the personal allowance (of about £6,500) will gradually be withdrawn from those with income of over £100,000.

If you have control over how your income arises it could make sense to arrange for income to arise before 6 April 2010 and be taxed at the old 40% rate. With interest rates at a very low level the cash flow implications of paying tax early should not be too severe.

This approach may be especially suitable for directors or shareholders of family companies who could arrange to pay bonuses early or increase or start taking dividends.

If paying dividends it is important to be sure there are sufficient realised profits, otherwise the dividend will be illegal and the tax saving may be effective.

For further advice, please do not hesitate to contact us on 01992 444466 or directors@hbaccountants.co.uk.
 

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