Here at Michael Sohor & Co we are asked many questions on many different topics during the course of a working week. These are some of the most commonly-asked questions which are raised by the greatest number of people:
Is it better to be a sole trader or a limited company?
At present there are tax savings available for virtually all businesses if they trade through a limited company as the rate of corporation tax on retained profits is lower than the rate of income tax and national insurance combined which is payable by sole traders. Please note that other complications arise within limited companies which mean that this option is not right for everybody. Our advice will be tailored to your individual situation.
What can a company group structure do for me?
Groups benefit from the ability to surrender losses from one group member to another whilst simultaneously ring fencing risk of separate trading activities in separate group companies. Also the substantial share holdings exemption may enable individual trading subsidiaries to be sold tax free within the group. Please note, this is a complex area and technical advice will be given to suit your circumstances.
If I sell a second home, do I have to pay Capital Gains Tax?
Basically, yes you do, but there may be options to reduce this substantially. See the next faq for more info.
If I buy a second home, is there anything I should do now with regard to future Capital Gains Tax planning?
If you have a second private residence you can elect to nominate it as your main home for a very short period, say, less than a month and then revert your main residence back to your first home. Also, if you let any of your residencies during your period of ownership there is a further lettings exemption which may apply and can be extremely valuable.
Following on from the Inland Revenue statutorily defining integral features it may be possible for a buyer of 2nd hand commercial investment property or business premises, to obtain capital allowances on such items included within the purchase price. This is a complex area and advice must be obtained prior to undertaking the transaction.
This list is by no means comprehensive, but it is surprising how often these particular questions crop up in practice.
We look forward to being of service to you.