Small companies urged to plan now for April 2010 tax hikes
A leading North West accountant is issuing a rallying cry to small firms to start planning now for the new raft of tax hikes effective from April 2010 - including the controversial 50% top rate of income tax.
Merseyside based Woods Squared director Alan Woods said entrepreneurs are viewing the tax increases with ‘a sense of dread’ but advised careful planning could stop the tax pain for both the individual and the business.
“Small firms must grow to survive,” he said. “These tax hikes are a threat to that principle. Our strong advice to directors of small firms is to plan now. The business must be focused on growth and being tax efficient is fundamental to this. However it is not always straight forward for smaller businesses to achieve tax efficiency as often they are not finance experts. But there are a number of solutions to reducing the tax take. For example, tax on dividends is going up 10% to 42.5% So owner managers can look at alternative forms of payment to the salary and dividend approach. Simple measures like this can go a long way to saving business owners a huge amount of tax.”
Mr Woods warned business owners that it is not just those earning above the headline rate who will be hit with tax hikes.
“The Government is withdrawing tax free allowances for anyone earning over £100k meaning those earning between £100k and £113k pay an effective tax rate of 60%,” he said. “Higher rate pension relief will also disappear from 2011. So for business owners looking to make pension contributions it is worth planning to put more money into the pension pot now while the higher rate relief is still there. The key to success with business finance is proactive planning.”
Posted November 12, 2009
- Great DELL Offers for Startup Businesses
- FreeAgent Online Accounting - FREE trial and 10% off for Bytestart readers.
- Home Business Insurance - Save money with Direct Line for Business. We guarantee to beat any quote for the same cover. Immediate quote available.
