TAXguide 18/18: Small business tax issues
In TAXguide 18/18, Rebecca Benneyworth explores the recent tax changes affecting small businesses, and looks at the impact of the more recent changes to dividend taxation and the rate of corporation tax on the small business tax landscape.
However, this is offset by the reductions in corporation tax which have been partially implemented to date, but which will see a further reduction in the rate of corporation tax of 2% to 17% from 1 April 2020. Although this reduction has already been legislated for, if there were to be a change in government, this change may well not go ahead.
They key to understanding the current position is to appreciate that there are ranges of profits where incorporation can produce a reasonable tax saving – likely to outweigh the additional costs of operating through a limited company, even where all of the post-tax profits are extracted; but this is by no means always the case.