The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
A number of anti-avoidance provisions may be relevant in the context of partnership planning, in particular, when introducing service companies or corporate partners. This guidance note covers some of the key provisions. The rules should be properly applied according to the facts of each case.
A mixed partnership is a partnership made up of a mixture of individual and non-individual members. Non-individual members are often companies but could also be trusts or even LLPs.
Legislation tackles tax motivated allocations of business profits or losses in partnerships made up of both individual and non-individual members. This is needed because individual members of a partnership may pay income tax at the highest rate of 45% and the 2% National Insurance whereas a corporate member will pay corporation tax at a lower rate (19% prior to 1 April 2023 and between 19% and 25% from 1 April 2023 (depending on the level of profits), see the Computation of corporation tax guidance note for more information).
Therefore, in some cases, it may be possible to allocate excessive profits to a corporate member which would then be subject to lower corporation tax rates rather than higher income tax rates. Further, excessive losses could be allocated to an individual enabling him to benefit from tax relief at income tax rates. These rules allow HMRC to reallocate the profit share of a company to an individual, or reallocate the losses of an individual, where amounts are deemed to be ‘excessive’.
See the Allocation of partnership income guidance note.
Where one of the main purposes of an arrangement involving the disposal of assets or income streams through a partnership is to obtain a tax advantage (income tax or corporation tax), the person making the disposal will be subject to income tax (or corporation tax) based on the market value of the asset or income stream.
The legislation has been introduced to counteract
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
The supply of fuel and power is treated as a supply of goods for VAT purposes. Supplies are fuel and power are normally liable to VAT at the standard rate. However, providing certain conditions are satisfied, it is possible for suppliers to charge the reduced rate of VAT on certain supplies of fuel
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeUK withholding tax may be reduced under the provisions of a double tax treaty (DTT). Prior to 1 June 2021, payments of interest and royalties made to EU resident associated companies were also exempt from
Taxpayers may wish to consider basic tax planning arrangements in use the capital gains tax annual exemption. This type of tax planning is often reviewed at the end of the tax year.This guidance note first looks at the annual exemption in detail and then various tax planning strategies that might be
What is an accumulation and maintenance trust?An accumulation and maintenance (A&M) trust is a particular type of settlement intended to make provisions for children and young adults up to the age of 25. The key feature is that trustees are given discretion over how to use the income for the benefit