Maximise Tax Savings Through Your Corporate Partner

Reap the rewards of adding to your 'corporate partner' duties.

With the new 2010/11 50% income tax rate now here, you will most likely have heard that allocating partnership profits to a newly introduced corporate partner can reduce or eliminate what would be taxable at the new rate. This arrangement must be on a commercial basis in order for it to be effective, which limits the amount of profit that can be sheltered at lower corporate rates.

However, there is another avenue. Whereas duties such as managing the firm, employing staff, facilities management and treasury functions can all be allocated to the corporate partner to enable appropriation of profit, even greater tax savings can be made if you also add certain pensions responsibilities. For example, the corporate partner can provide a retirement fund that buys out retiring partners. They can also make pensions contributions to an unapproved pension scheme on behalf of the other partners.

To learn more about these strategies, or to discuss other ways of reducing liability for the new 50% income tax rate, please contact Nigel Armstrong on 020 7240 9971 or email nigel.armstrong@alliotts.com

Alliotts Chartered Accountants and Business Advisors,
Imperial House, 15 Kingsway, London, WC2B 6UN
Registered to carry on audit work by the Institute of Chartered Accountants in England and Wales and authorised and regulated by the Financial Services Authority for investment business.