Corporation Tax - a planning opportunity

Careful planning of business activities can significantly reduce the corporation tax bill and thus increase retained profits.

Many companies are members of groups for trading purposes, but before setting up such a structure, careful consideration should be given to the potential impact this will have on tax. With differing corporation tax rates, group structures can often increase the effective tax rate leading to a greater tax liability overall.

Another tax saving opportunity arises when that hoped for day arrives and you are offered several million pounds for your business. Depending upon the nature of the sale, ensuring the proper company structure before sale can reduce the tax charge considerably. So if you are contemplating a sale, please seek professional advice on whether a reorganisation of your company would be beneficial.

Even in small companies, not all shareholders will have the same needs when it comes to extracting value from their company. It's therefore important to structure the company's share capital in the best way and to ensure that tax efficient remuneration packages are designed for the owners.

To find out more on ways to save corporation tax, please contact Bob Churchill, Head of Taxation, on 01622 213745 (email bob.churchill@dsh.co.uk.)