Year End Tax Review 2010/2011


Lead articles

Looking forward

This year, next year

Rate of change

Pension merry-go-round


Too much NIC

NIC and pensions

Company cars

Tax-free benefits

Childcare vouchers

Business - General

Time to incorporate?

Associated or not?

His and hers

Family bonus

Profit and loss

Show me the money

Can't pay, won't pay?

Turning back the clock

Business - VAT

Standard VAT or flat VAT?

VAT's up again

All Europeans now

A good start for VAT

Happy returns?


Top-up savings

Rainy day money

Capital Gains

Gains favoured

Splitting gains

A place in the country

Holiday lets reprieved


Family fortunes

Where there's a Will

Credits and debits

Benefit going

Piggy banks

Still trustworthy?


Penalty shoot-out

Going online

Paperwork, paperwork

Pay tax later

Opportunity knocks again


Give and save

Non-Domiciled People

Home and away


Interesting times

Time to incorporate?

National Insurance is an extra tax on salaries and business profits, even if politicians won't use the "T-word". Sole traders and partnerships can reduce the impact of NIC by forming a company and paying dividends instead of salary - dividends are not NICable. This is a complex decision, which should not be taken on tax grounds alone - many other factors have to be considered. There is more paperwork and law around running a company than an unincorporated business, but the tax savings may outweigh that.

Mr Darling intended to increase the small profits rate for companies from 21% to 22% in an attempt to even up this advantage, but Mr Osborne has declared that he will go the other way back to 20%. A sole trader making a profit of £50,000 in 2011/12 would have to pay about £13,333 in tax and NIC; someone running a small company with the same profit would only have to pay corporation tax of £8,5505. If the whole of the company's profit is paid out as a dividend there will be some more income tax to pay, but there is still a substantial saving.

Action Point!
Have you considered incorporating your business?