From remuneration strategies through to advice about higher rate tax relief, here at Equate, we offer expert tax advice for a wide range of circumstances and ambitions. Here are four of our top tips for efficient taxes.
Trading as a limited company. The most tax efficient remuneration strategy for yourself is a small salary (below or at the personal allowance), with the balance topped up by dividends. Consider pensions, income protection and other tax efficient vehicles of extracting value from the business. At Equate, we design our clients remuneration to maximize their wealth. We can help you stay disciplined by urging caution over how much you take out of the business, to avoid you running into tax liability problems.
Consider setting up a money box company structure. This will enable you to protect your excess trading profits from commercial risk and also distribute profits to family members or trusts. Profits can be distributed between companies at no tax charge. What this means in practice is, a husband and wife could be earning around £80,000 per annum without any personal tax. Please note this will change from April 2016, however this is still the most efficient way to extract profits.
If you are a service based business with a VAT inclusive turnover of less than £187,500, you may want to consider the Flat Rate VAT scheme. You can continue or start charging your customers VAT at the full rate, and then pay across a reduced rate based on your business sector. You also receive a 1% discount in your first year; a typical rate is 10%. We have clients saving thousands on this scheme.
If you are on a conventional VAT scheme and use your personal vehicle to visit your clients or suppliers, you should be reclaiming VAT on your mileage. For a typical individual doing 10,000 business miles per year driving a BMW 325i they could be recovering around £250 in VAT per annum.