Advantages of Having an Associated Company to Minimise Tax

With genuine commercial reasons you have the chance to run different parts of your business through separate companies, but this can lead to higher tax bills. So what are the steps that you can take to reduce them?

It’s not unusual to see more than one business located in the same factory or office premises. Maybe the owners started out with one trade and, after becoming successful, branched out into others each spawning a new company with a separate identity. This might seem a perfectly logical business structure; however it could lead to more tax.

Though the companies separate, they will be connected for corporation tax purposes to another where both are controlled by the same owners. These are known as associated companies. Normally, a company will be allowed to earn profits of up to £300,000 per year and be taxed on these at the small profits rate. Thereafter, the higher corporation tax rate is phased in. The trouble is, where two or more companies are associated, the SPR band is divided between them.

If all this sounds confusing to you, the best thing to do is to get in touch with an accountant. KVS Accountants are experienced tax advisors serving many small to medium scale businesses. Contact KVS Accountants for a free no obligation meeting on 020 7731 6131. We are Tax Consultants in Wandsworth, Battersea, Southfields, Earlsfield, Putney, Roehampton, Hammersmith and Kensington.


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