Are You Paying Too Much Tax?

Are you paying too much Tax?

“Time has flown by” is a common phrase we hear so often as the days and weeks seemingly merge into years.  Without realising it your care business may have also changed beyond recognition in that time.  It  may be time to take stock and consider whether you are paying too much tax.

If you have not reviewed your business structure recently and are operating as a sole trade or partnership, now is as good a time as any.  Incorporating a business can save or defer tax, especially when profits are retained in the business to fund growth or to pay down any bank debt.

With corporation tax rates having reduced over the past few years (and down to 20% for all companies from April 2015) and with no income tax or national insurance due on dividends paid out up to the basic rate band (currently £41,865) the on-going savings of moving to a company structure may make it an attractive route for care businesses.  It is essential to consider all taxes including business, personal and indirect to determine the most appropriate business structure in each particular circumstance. We can help you to consider this as well as advising of the potential costs to implement.

If you are already operating through a company there are still further opportunities to save tax.  For example, a review of your remuneration strategy could result in tax savings for the directors and shareholders.  In addition, it is never too early to plan for a future exit, to ensure that Entrepreneurs’ Relief is available, to reduce your capital gains tax rate to 10% rather than the headline rate of 28%.  Furthermore, there are various tax reliefs and allowances available to the company which should be reviewed on at least an annual basis to make sure they are being claimed to their maximum value.

Although VAT is not an issue for most care businesses because their supplies are VAT exempt, it may be worth a quick health check to ensure they are VAT exempt and to check the correct (or lower!) rate of VAT has been charged on supplies to the business.

Finally, a boring but essential reminder, regardless of how your business is structured, is to make sure you keep good records.  To ensure that you pay the right amount of tax and can offset all of your business expenses against income, those receipts need to be kept in a safe place!

We can help to identify the best way to save tax based on your particular circumstances without compromising your commercial goals.  If you would like to discuss further, please get in touch with Rachael Anstee, Director at Hazlewoods, on 01242 246688 or e-mail rachael.anstee@hazlewoods.co.uk