Higher rate tax at 40% is now paid on earnings over £42,475 (2010/11 £43,875), earnings below this limit are taxed at 20%.

An additional rate of 50% is due on earnings over £150,000.

Both employees and employers NIC were increased by 1% to 12% and 13.8% respectively in the 2011 budget.

Owner managed Limited companies remunerating their directors need to plan very carefully whether to pay out bonuses or to vote dividends in the year because these are taxed at a much lower rate and don’t attract NIC.

Company cars are taxed on their CO2 emissions to a maximum of 35%. There is no longer a ceiling on the price of a company car which was previously £80,000. The average increase in tax and class 1A NIC can be as much as £7,000 a car whos list price is over £80,000.

Careful planning of company cars is needed to keep the tax burden of the company and employees to a minimum. Many fuel efficient and greener cars have tax advantages over there larger rivals.

EIS income tax relief at 30% can mitigate tax for higher rate tax payers whilst encouraging investment in growing enterprises.

Wilcocks & Associates specialise in helping minimise tax and maximise for both a company’s balance sheet and personal wealth of directors, partners, and senior personnel.

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