TAX EFFICIENCY

Advising you on the best structure for your business

How can Haggards Crowther help with your tax planning? Tax efficiency is a primary concern for all our clients.

WE WILL ADVISE YOU ON THE BEST STRUCTURE FOR YOUR BUSINESS, FOR YOU AND YOUR INVESTORS.

Tax drives decisions

Did you know that setting up as a company or a sole trader can impact your future tax bills? Or that there are some fantastic tax reliefs available for new business investors? At Haggards Crowther, we can help you establish the most tax-effective structure for your business as well as advising you on the overall considerations for setting up a business including:

  • Whether you should incorporate or be a sole trader?
  • The solutions available for investors, such as the Enterprise Investment Scheme, and the Seed Enterprise Investment Scheme.
  • On the most tax efficient structure for you to draw funds from the business.
  • What reliefs are available if it all goes wrong?

TO INCORPORATE OR TO BE A SOLE TRADER?

There are significant tax advantages to incorporating, and the savings in tax more than outweigh our extra costs. However, some choose to stay as sole traders because:

  • It is early days, and they want to see how things go before taking on the extra administration and cost.
  • They are quick and easy to set up.
  • There can be tax advantages to starting off as a sole trader.
  • No balance sheet is required by HMRC making the bookkeeping much easier.
  • Privacy is important and as a sole trader, no information appears on the public record.

We can advise you on the benefits of both options and assist you on making the leap from being a sole trader to incorporating.

EIS AND SEED EIS

There are various tax reliefs in place to encourage investments in start-up businesses, known as Seed Enterprise Investment Scheme (SEIS) for investment in small start-ups and Enterprise Investment Scheme (EIS) for medium sized companies.

Haggards Crowther will assist in obtaining HMRC approval and advise you on how to comply with the rules for these schemes.

TAX EFFICIENCY IN DRAWING FUNDS FROM A LIMITED COMPANY

It’s important to take drawings from a limited company in a structured way to minimise your tax liabilities:

  • £7,956 annual salary from 6 April 2014. This is the highest salary you can draw without becoming liable for National Insurance and therefore increasing the overall tax burden...Don't draw more salary unless there are specific reasons to do so. Pay the remaining drawings as dividends. There is no restriction on the number of dividends you can draw in any year, and although the company will pay corporation tax, you will pay less income tax as a result.
  • Reclaim expenses, including business miles at 45p per mile.
  • Repay loans used to finance the company at the start.
  • If you are a higher rate tax payer, don't forget to reclaim business expenses from the company, even if they are not allowable for tax (EG: entertaining). Although the company may not get tax relief, the repayment of the expense is still a tax efficient way of getting funds out of the company and into your personal account.
  • Keep surplus cash in a company bank account and pay it in dividends over a number of years to minimise the tax burden.

IF YOUR BUSINESS DOESN’T WORK OUT

No-one one likes to consider that their business idea may not work out. We will advise on the tax breaks available if it doesn't work out. Your view on this can have important implications on how you structure the company at the start. 

'When starting a business it is a great help to have the back up of independent advice and guidance when making key decisions. Haggards Crowther have given us knowledgeable, impartial advice on a wide range of topics, to help us make the right choices. We would recommend them to anyone.'

MR P