Ltd company ?
- Thread starter Blue.
- Start date
lazy farmer
Member
- Location
- som/dor border
Pros and cons.
we have one. Currently only seeing the pros. Saving soo much tax !
we have one. Currently only seeing the pros. Saving soo much tax !
Chae1
Member
- Location
- Aberdeenshire
20% maximum tax to pay.
If you can set it up alongside a existing company can keep it in lower tax bracket too.
For example you could start a Ltd contracting business alongside your dairy. So contracting business invoices dairy for all work done for dairy. Feeding, mucking out, spreading slurry, silage etc. If the dairy side has a good year financially, a lot of draining may have taken place with your big 360.
Ltd company can take advantage of 130% capital purchase scheme at present.
Think a downside is getting money out. The ltd company can choose to buy a farm though, or some cows.
Accounts and invoicing between companies can be a bit of a faff. Seperate set of accounts cost a bit more.
If you can set it up alongside a existing company can keep it in lower tax bracket too.
For example you could start a Ltd contracting business alongside your dairy. So contracting business invoices dairy for all work done for dairy. Feeding, mucking out, spreading slurry, silage etc. If the dairy side has a good year financially, a lot of draining may have taken place with your big 360.
Ltd company can take advantage of 130% capital purchase scheme at present.
Think a downside is getting money out. The ltd company can choose to buy a farm though, or some cows.
Accounts and invoicing between companies can be a bit of a faff. Seperate set of accounts cost a bit more.
Stw88
Member
- Location
- Northumberland
Is the rate of tax not rising to 26% for company’s?
- Location
- Somerset
If you have a profitable business and looking to reinvest that profit it's worth having a close look.
If you want to spend the profits on yourself, or aren't making much any gains are minimal and unlikely to be worth it.
Pay very close attention to capital gains on setup or exposure to inheritance tax, particularly if you own the farm and there is any chance of development.
If you want to spend the profits on yourself, or aren't making much any gains are minimal and unlikely to be worth it.
Pay very close attention to capital gains on setup or exposure to inheritance tax, particularly if you own the farm and there is any chance of development.
Corporation tax rate at 19% for year starting April 22, for April 23 if profits below £50k then also 19%. Looking at starting one myself for fabrication work done for others. as currently sole trader. Fair few benefits, but extra accounts and admin cost.
Staying at 19% for under £50k profit,even 25% is better than 40%
Also £2000 of dividend is tax free so even after 19% corporation tax saving 21% if you are in 40% bracket. Only £420 but all helps, could be double if partner is also shareholder. Have a sole trader/partnership and a ltd co is certainly a good way of making sure you are not paying 40% tax, but only, as farmerdan pointed out, if you are not actually drawing it for personal use. You can draw out retained profits at any time so if you have a bad year on the non ltd side you can draw extra from retained profits in ltd to manage tax burden more effectively.
- Location
- Lorette Manitoba
is a Ltd business safer in the event of divorce
frederick
Member
- Location
- south west
Not in my case she's got 50% of the shares.
Can't see why it will be treated as an asset the same as in all divorces
Horn&corn
Member
Continuing to review this idea. How much profit do you need to make before ltd is justified? With 4 partners and mostly owner occupied it seems a complicated system with marginal savings but presumably worth it if profits are high enough. PM a figure if helps because I know some don’t understand profit and dairy farming in same sentence!
I think it’s about 40k taxable profit per partner before you need to get worried about 40% tax brackets. So 4 partners 160k taxable profit. LTD isn’t without its complications/added costs though
frederick
Member
- Location
- south west
In your situation it will be north of 200k. But how long will it remain 4 partners. If 2are older then giving them each 50k may not be appropriate and it may pay to set up now for the future.
Possibly right. But wouldn’t all people in the ltd company need to have a share in the farm asset for that to work.
