Tax-Man Income Tax & Multi-services
Many small companies have paid corporation tax at the 19% rate of corporation tax, and have then extracted profits using a combination of a small salary to cover the personal allowance, and the remainder of the profits extracted via dividends. This is still likely to be a popular strategy to extract profits as its ensures that full use is made of salary to utilise the personal allowance, with dividends, (generally a lower tax option) making up most of the extraction. A lot of companies have combined this with the benefits of a non earning spouse and have paid 2 small salaries and extracted dividends equally to the married couple. The Arctic systems decisions, eventually gave them some support but the Government is to introduce new income splitting rules from April 2008 to counteract this. How will the new rules work? We'll be writing a separate article on the details of the provisions however in short where there is a business with low capital assets and where most of the work i...
