Business owners must act before Budget to protect personal wealth
Company directors with significant cash balances in their companies need to take action before the Chancellor stands up to deliver his Budget on Wednesday 3 March, tax experts at national audit, tax, advisory and risk firm Crowe are warning.
Sue Daye, tax partner in Crowe’s Midlands and South West tax team, said Rishi Sunak’s 2021 budget was highly unlikely to be a giveaway budget, given the £350 billion cost of the coronavirus pandemic on the public purse.
“The Chancellor has to tread a fine line between encouraging industry to get back on track, business owners to invest for recovery and growth, and beginning the long haul to cover the huge national debt incurred by the costs of Covid-19.
“He will be seeking a number of ways of raising money without increasing mainstream taxes on employees too much. He has previously indicated he is minded to address the difference between the tax paid by employees and that paid on dividends by business directors.”
She said it was likely he would go further and seek to create a level playing field, possibly in one step in this budget.
Currently directors have an annual tax-free dividend allowance of £2,000, with any surplus income taxed at 7.5%, 32.5% and 38.1% depending on whether they are a basic, higher or additional rate tax payer, which is a more generous tax rate than that enjoyed by employees taxed on a PAYE basis.
Mrs Daye said: “Capital Gains Tax is another tax that could be on his radar.
“If you are currently sitting on significant capital reserves up to £100,000 then you need to take action before the budget, but we strongly advise you seek professional advice in order to maximise your savings and protect your cash.
“How and when you pay dividends to you and other family shareholders is of paramount importance and you have limited time to take action,” she stressed.
Crowe is holding a post-Budget webinar on Friday 5 March at 12 noon which will assess and analyse the Chancellor’s actions. Attendance and participation in the event is free and registration is available by emailing email@example.com or calling 0121 543 1900 for details.
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Miriam Sherwood, Senior Marketing Manager (Regions), Crowe. Tel: 0121 543 1900
Notes to Editors:
Crowe is a national audit, tax, advisory and risk firm offering global reach and local expertise. We are an independent member of Crowe Global, the eighth largest accounting network in the world. With exceptional knowledge of the business environment, our professionals share one commitment, to deliver excellence.
We are trusted by thousands of clients for our specialist advice, our ability to make smart decisions and our readiness to provide lasting value. Our broad technical expertise and deep market knowledge means we are well placed to offer insight and pragmatic advice to all the organisations and individuals with whom we work. Close working relationships are at the heart of our effective service delivery.
For more information, visit: www.crowe.co.uk
Crowe industry recognition
- UK Member of the 8th largest accounting network in the world (International Accounting Bulletin World Survey 2020)
- Top charity auditor (Charity Financials Auditor Benchmarking and Charity Finance Audit Survey, 2009 – 2020)
- Leading advisors to the UK mid-market, ranked 8th AIM and Main Market auditor (By number of audits of listed companies, FRC Key Facts and Trends in the Accountancy Profession, Figure 38, October 2020)
- 9th largest audit firm in the UK (UK fee income of audit firms that audit PIEs – by fee income on audit, FRC Key Facts and Trends in the Accountancy Profession, Figure 33, October 2020)
- Awarded Bronze for Accountancy Firm of the Year – Large (2020 Citywealth Magic Circle Awards)
- Global Mobility Provider of the Year (Global Payroll Awards 2020)
- Employment Tax Specialist of the Year (Global Payroll Awards 2019)