This paper compares the best method of minimising taxes for a company with Pre-tax profit spend of £20,000. The paper compares tax impact on by either taking a Salary, Dividend distribution or pension contribution.

The following assumptions have been made in this illustration:

Basic tax rate applies

Small Companies Corporation Tax applies (20%- 2011/12)

The additional £17,730 slice of Salary is applied at higher rate of Income tax (40%) and 1% employee NIC

An Employer pension contribution of £20,000 will be tax deductible

The Tax treatment depends on individual circumstances for each client and may be subject to change in future.

* Assumes taxable income below £150,000

** Nil Corporation Tax due before is full tax allowable

*** Income from this pension will be taxable

This publication is for informational purposes only. Opinions expressed should not be construed as tax planning or accountancy advice. The particulars of any person’s concerns and circumstances should be discussed with a qualified accountant and tax advisors prior to making any decision. Genesys Business Services provides accounts, Payroll, tax planning, property accounts and tax services. Ask for a free consultation.

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