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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4972
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi, We have been a Partnership for the last 10 years but

Customer Question

Hi,

We have been a Partnership for the last 10 years but have recently secured contracts that will increase revenue quite a bit for the next 2 years at least, would we better off for tax purposes by becoming a company?

Thanks, Andy
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.

Hello and welcome to the site. Thank you for your question.

There are advantages of having a limited company.
There is also financial security in the event things go wrong as you are protected by limited liability.

CT rate is 20% and provided your salary and dividends paid remain within the basic rate limit, dividends do not attract income tax. As a partnership, all profits are deemed income and you are taxed at mariginal rate of income tax..i.e you could be paying 40% on some of it.

If you are growing, I would seriously consider LTD company option.
Although there may be additional costs to service regulatory requirements, these become marginal in the long run.

 

 

I hope this is helpful and answers your question.




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