People running their own businesses have their own slant on the budget. What might be good for an employee might not be so good for an employer and if you are both, it can be hard to know what to make of it.
Overall, I think it was a good budget for business because it didn’t try to do too much. Above all, business owners want stability. A business owner relies on his or her own efforts for success and is not reliant on a Chancellor to make or break the business. If obstacles are removed, all well and good but if an obstacle is put in our way, we work out how to deal with it.
There is more detail in our downloadable PDF (below), but some fundamentals remain. Taking capital out of a business (capital gains) is usually the most tax efficient, dividends are usually next best and salary usually the least tax efficient. And for all of these, spreading the income or gains among family members can make a big difference. A brief case study demonstrates this:
One of our clients is drawing a pension from a previous job and doing well with his consultancy company. He wanted to take more from his company but not at the higher tax bands he would be forced into because of his pension. A review of his business showed a good case for paying a small salary to his wife for work she was doing and, additionally, by reorganising the company’s share ownership it was also possible to pay her dividends. The result is the opportunity to withdraw an extra £11,000 from the company and pay no income tax on this, which is a saving over £4,000 on the personal tax bill our client would have faced if he had drawn an extra £11,000 himself.
If you would like a discussion about whether you could be paying less tax, get in touch by emailing me at firstname.lastname@example.org or calling on 01962 832513.
- The first scarlet briefcase was made for Gladstone in 1860 and was in use until after the 1997 election, when Gordon Brown had a new one made.
- The longest Budget speech was four hours 45 minutes by William Gladstone in 1853.
- Only one Chancellor has failed to deliver a Budget, Tory Iain Macleod, who died in 1970 shortly after his appointment.
- Derick Heathcoat-Amory was responsible for perhaps the best Budget one-liner: ”There are three things not worth running for – a bus, a woman or a new economic panacea. If you wait a bit, another one will come along.”
- John Major’s Budget in 1990 was the first to be televised live.
- Sir Geoffrey Howe named his dog Budget.
- In his 1953 Budget RA Butler announced that the sugar ration would be increased from 10oz to 12oz a week to help the nation make celebratory cakes for the Queen’s Coronation that year.
- A Chancellor delivering his Budget is the only MP allowed to take alcohol in the chamber. The last Chancellor to take advantage of this rule was Ken Clarke. Since then, they have all stuck to water.