Tax and business owners

[Jonny TVR]

Corporation tax due to increase to 25% from 1 April 2023, the effective tax rate for business owners will be almost 54%.

How long will entrepreneurs relief be around at 10% or at all.

What are business owners planning on doing? Selling up? Moving abroad?

[Candellara]

Jonny TVR said:

Corporation tax due to increase to 25% from 1 April 2023, the effective tax rate for business owners will be almost 54%.

How long will entrepreneurs relief be around at 10% or at all.

What are business owners planning on doing? Selling up? Moving abroad?

Moving to Germany

[Jonny TVR]

Candellara said:

Moving to Germany

Is that mainly due to Brexit or for the tax implications?

[Chamon_Lee]

I will likely sell up before then as I am just getting a bit tired of it all already.
I assume most companies will pass on the increase in tax to end customer prices.

[NickCQ]

Jonny TVR said:

Corporation tax due to increase to 25% from 1 April 2023, the effective tax rate for business owners will be almost 54%

Out of interest, how do you calculate that 54% - at some point does it not become more efficient to take it all as salary and shelter from corp tax? CGT rates if you sell the business are still more attractive than PAYE even without entrepreneurs' relief.

[Jonny TVR]

NickCQ said:

Out of interest, how do you calculate that 54% - at some point does it not become more efficient to take it all as salary and shelter from corp tax? CGT rates if you sell the business are still more attractive than PAYE even without entrepreneurs' relief.

See below article ...

Before 6 April 2016, a top
rate taxpayer would pay an effective rate of 43.75% on
profits extracted from his company (19% corporation tax
and then an effective dividend tax rate of 30.56%). After
the 2016/17 increase, this effective rate became 49.86%.
For a company that is taxed at 25%, this effective rate
jumps to 53.58%! It gets worse if we consider the effective
rate on the 26.5% marginal band of profits because this
has a 54.5% effective rate.

Thats what I was thinking with regard to salary making more sense than dividends.

I've got a meeting with my accountant next week so will see what he says

[NickCQ]

Jonny TVR said:

Thats what I was thinking with regard to salary making more sense than dividends.

If you put £1 million (random large number to show effect of 45p rate) through PAYE your effective tax rate is about 46% including NI.

[Candellara]

Jonny TVR said:

Is that mainly due to Brexit or for the tax implications?

A mixture of both but something we'd been planning pre Brexit anyhow. The plan was always to move permanently to Germany when i was 55 but Brexit etc may accelerate this now by a few years