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25 May 2010 / Peter Rayney
Issue: 4256 / Categories: Comment & Analysis , Business
PETER RAYNEY examines how incorporating a company can lend itself to further tax savings


  • Deferring capital gains on incorporation.
  • Entrepreneurs’ relief and goodwill.
  • Care must be taken in valuing goodwill.
  • Intangibles related-party rules may apply.
  • No time like the present.

We have now entered the era of super tax rates which means that many successful sole traders and partners are exposed to a top rate of 51% (including 1% National Insurance) on a large slice of their profits.

To put it another way this means that only £49 out of every £100 of profit earned will be available for personal drawings or reinvestment within the business.

It is not surprising then that we have seen many highly profitable sole traders/partnerships/limited liability partnerships rushing to incorporate.

The obvious tax carrot being offered with a company is that profits can be retained at...

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