Rewarding and Incentivising Staff
Good people aren’t always easy to hold on to or to come by. Looking out for key staff is vital. While traditional salary sacrifice plans ceased following the changes introduced by 1st April 2017, most have continued, and substantial tax savings can still be enjoyed on various services and products like childcare vouchers, computer equipment, cycle to work and workplace nurseries.
If you’d like, you could go a step further and consider setting up an employee sharing scheme, which, if properly structured, will benefit both you, the employer and your employees. This can be a very effective tool for attracting and holding on to the best talent, and in aligning employee interests with company interests. Proper planning is crucial though; that is if you want to meet HMRC’s stringent requirements and to navigate the different associated tax rules.
Providing Tax-Efficient Pension Provisions
A majority of business owners will find themselves considering executive pension schemes at some point. However, if given a choice between a SIPP or an SSAS or another type of scheme, most business owners will struggle to find a way to move forward.
The general rule is that pension contributions offered by employers for employees or directors are tax-efficient for both the director or employee and the employer. As such, this isn’t something that you can afford to overlook. The quid pro quo here is that the money is restricted when it comes to how it can be invested and when one can use it as a retirement benefit.
Keeping it Within the Family
Many Small and Medium Enterprises continue to be family-fun affairs. Nevertheless, it doesn’t matter if the family is directly involved in running the business, at some point, you will have to start thinking about how you can provide for your family in a more tax-efficient manner like how you can save more for school fees. Well-considered tax planning can help with this.
Planning for An Exit
If you are planning an exit plan, then make sure that it leaves you in the best tax position possible when the time to retire, leave or sell your business reaches.
A great exit plan should make it easy for you to exit when and how you choose while protecting you, your shareholders and employees from tax exposure, and guaranteeing your company’s continued success.
Most business owners today are aware of how significant entrepreneurs relief is considering that it permits some business owners to lower the capital gains that are tax payable when it comes to the sale of shares in the business from 20 percent to 10 percent for qualifying transactions. However, this presents so many pitfalls for the incautious, and professional advice should be sought if you want to meet all the qualifying conditions.
Furthermore, there are plenty more options available to entrepreneurs structuring an exit like a company purchasing its own shares or using an EOT or employee ownership trust – and each has its unique tax consequences.
Do Not Be Tempted to Do It All On Your Own
As an entrepreneur who has worked your way from nothing to something, it can be very tempting to try and address all these issues alone. However, we’d like to issue a word of caution considering that we’ve seen plenty of cases where non-specialist or DIY tax planning has resulted in some serious oversights and problems.
Our tax system is an evolving and highly complex beast – If you treat it with some respect and it could end up eating straight out of your hand. But if you stand on its tail, get ready to be bitten.
Disclaimer: This article is not a substitute for financial advice from a trained professional. By using this website, you agree that DesignFreeLogoOnline cannot and will not be held liable for any action taken as a result of using the information in this article.