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You'll find it pays to ask the right tax questions.

`A GREAT deal of my time is spent in complex tax planning and transaction work,'' says Chadwick Headof Tax,Mike Hodges. ``But it is amazing how often the `bread and butter' tax planning questions areoverlooked.''

Question: If I sold the company tomorrow, what rate of tax wouldI pay on the gain?

Answer: ``As little as 10pcbut as much as 32pc. If you sell your company after this April 5 and make again of pounds 500,000 you could be as much as pounds 110,000 better off,depending on whether you have planned to make sure you get business asset taper relief.''

Question: Someone has told me that my post code could affect my tax bill,can you explain why?

Answer: ``They a reabsolutely right. Iffor example you are thinking of moving your business to larger premises just down the road and are paying, say, pounds 500,001for the new building, the answer could save you pounds 20,000,if the post code of the new property means it is in a disadvantagedarea.''

Question: What is the best way to take money out of the company so that. I pay as little tax as possible?

Answer: ``From this April, when NI rates go up,if you want pounds 10,000 in your hand out of your company and take a little care to make the right choice between extra salary or adividend, you could make sure you a reover pounds 2,000 better off.''

Question: We do a lot of clever research and development; can we get tax relief on this?

Answer: ``Yes indeed. Did you know that the tax man will give you a deduction for more than you actually spend? For small and medium sized businesses, the corporation tax relief is pounds 1.50 for every pounds 1 you spend.''

Question: As an employer,I need to start thinking about this year's pay rises. Is there anything from a tax perspective that. I shouldbeconsidering? Answer: ``If you are an employer and give,for example,an employee with a wife and two children, earning pounds 20,000 a year a pay rise of pounds 1,000 a year,he may receive as little as pounds 25 a month extra after the effects of income tax, National Insurance and the reduction in child tax credits. For a higher rate tax payer in the same position, the net increase will be just over pounds 18amonth.''Question: In the event of the worst happening, I'm not sure that I've made adequate provision for my family. How bigacheque would the tax man be expecting?

Answer: ``At a very basiclevel,if youhavean estate of pounds 500,000 anddon't do some fairly straight-forward planning, you could end up paying the tax man pounds 100,000.''

The overallmessageis very simple; never be afraid to ask the basic questions. They might just save you a lot of money.

For more information or tax advice please contact Mike Hodges on 0151 236 6262 or email
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2003 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Date:Mar 26, 2003
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