Tax Insider Newsletter Bundle

Unlocking Profits in a Limited Company: Key Considerations in 2025

With limited companies, business profits belong to that company as a separate legal person and are subject to corporation tax on them; the company’s owner will generally be subject to income tax and National Insurance contributions (NICs) on whatever they withdraw. It is different from a sole trader or partner, who is taxed on their profit (or profit share) irrespective of their drawings. 

Chris Thorpe looks at issues with extracting profits from a limited company.

Since the start of the Covid pandemic in March 2020, the number of people working from home in the UK has increased. With more employees now home-based, benefits-in-kind that are centred on the workplace are less attractive; but there is also the issue of fairness for those who, through their job role or domestic situations, need to be office-based.

Jennifer Adams outlines for employers a different way of giving employees benefits.

VAT and direct exports: A little-known fact

When a business exports goods from the UK the sales can be zero-rated, but a business has to fulfil certain criteria for the zero-rating to apply. Following Brexit, exports are supplies of goods to any destination or customer outside the UK, except for sales from Northern Ireland which is still within the EU single market for VAT purposes. 

Andrew Needham looks at the consequences of direct exports where the supplier arranges the export of the goods themselves.

The Anti-Avoidance Rules: Preventing Phoenixism in Practice

The ‘phoenixism’ anti-avoidance legislation in question at ITTOIA 2005, s 396B (‘Distributions in a winding-up’) is a curious animal in various ways. It complements changes to the transactions in securities (TiS) rules in ITA 2007, which now specifically identify a distribution in a winding-up as a TiS (at ITA 2007, s 684(2)(f)). 

Ken Moody attempts to navigate through the practical consequences of the anti-avoidance rules to deter so-called ‘phoenixism’. 

BADR: The long goodbye?

In the Autumn Budget on 30 October 2024, Rachel Reeves made some significant changes to capital gains tax (CGT). The main purpose of this article is to explain some of the knock-on consequences that were not outlined in the speech, but I will also remind you of the headline changes. I will refer to business asset disposal relief (BADR) throughout, even if referring to gains when it was called entrepreneurs’ relief.
 

Kevin Read considers some of the effects of the CGT changes announced in the Autumn Budget 2024.

A ‘deathbed’ tax planning step for spouses or civil partners

Inheritance tax (IHT) has been labelled by some as a tax on death. However, IHT has also been referred to as a voluntary tax, as steps can often be taken during an individual’s lifetime to reduce the IHT burden on their death. 

Mark McLaughlin looks at a ‘deathbed’ tax planning step for spouses or civil partners.

A fundamental change to the inheritance tax treatment of pension funds

A basic principle of pensions has been that tax relief – on premiums paid, the fund itself and the lump sum when the pension was taken – encouraged saving for a pension to supplement the state scheme. 

Richard Curtis looks at the Chancellor’s Autumn Budget 2024 Budget proposal of a fundamental change to the inheritance tax treatment of pension funds.

Q&As with Arthur Weller

Dividends or bonuses? We can work it out!

Consider the following scenario:

'On a wintry sunny morning, Alan was reviewing his company’s January 2024 management accounts. Alan was the sole director and 100% shareholder of Llandudno Hotels Ltd, which operated two large hotels in Llandudno. The business was on course to healthy pre-tax profit of around £650,000 for the year ended 31 March 2024. Alan had been planning to pay himself a substantial ‘bonus’ before the year-end'. 

What does Alan do?

Peter Rayney examines an owner-manager’s cash extraction following the numerous tax and National Insurance contributions changes.

Use them or lose them: 2023/24 tax allowances

As the tax year draws to a close, it is prudent to review one’s 2023/24 tax allowances and consider whether there is scope for utilising any unused allowances so they are not lost. 

Sarah Bradford explores options for using 2023/24 tax allowances so they are not wasted.

Record-keeping in a digital age

Lee Sharpe looks at taxpayers’ record-keeping obligations in light of HMRC’s inexorable march to digital everything (almost).

Historically, HMRC has been quite relaxed about whether original records must be maintained or digital facsimiles (scans, etc.). 

Trap for business owners seeking CGT incorporation relief

HM Revenue and Customs (HMRC) recently commenced a ‘One to Many’ campaign, targeting taxpayers who incorporated property businesses in the tax year 2017/18 but reported no capital gains tax (CGT) liability in their tax returns on the basis that ‘incorporation relief’ applied in full. 

Mark McLaughlin highlights a potential trap for business owners seeking capital gains tax incorporation relief.

Q&As with Arthur Weller