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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5112
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


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: 4 years ago.
Category: Tax
Expert: replied 4 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.