Corp Tax grading Scale above £150K vs starting multiple companies

[sojan]

hi
We run a company which mainly invoices 6 main clients and a bunch of smaller clients. Till last year it was all coming into single company and Corp taxed at 19% though profits around 300K+

But now due to grading scale and 25% tax over £250K, wanted to see if its worth to split into few companies so as to bring the profit down below £50K?
I understand few cons of this concept as means another set of accountants, bank accounts, HMRC filings and maintenance etc.

Still my estimate is savings of £15K - £20K reduction in Corp Tax payments

Is this a viable option or is there greater problems hidden out there with such an approach?

[northernladuk]

What are you asking a bunch of contractors about figures over quarter of a million pounds rather than a tax professional who specialises in this?

Even if any of our friendly accountants might read this I'm sure they are going to struggle to give you any worthwhile advice off the back of 5 lines and a question.

[eek]

hi
We run a company which mainly invoices 6 main clients and a bunch of smaller clients. Till last year it was all coming into single company and Corp taxed at 19% though profits around 300K+

But now due to grading scale and 25% tax over £250K, wanted to see if its worth to split into few companies so as to bring the profit down below £50K?
I understand few cons of this concept as means another set of accountants, bank accounts, HMRC filings and maintenance etc.

Still my estimate is savings of £15K - £20K reduction in Corp Tax payments

Is this a viable option or is there greater problems hidden out there with such an approach?

As the companies would be Related the £50,000 limit would be split across the companies - so you would be no better off.

Your fix is so simple, even HMRC have seen it...

[sojan]

As the companies would be Related the £50,000 limit would be split across the companies - so you would be no better off.

But each company will be billing separate clients. so the actual relationship will be with individual companies & client and Circa £50K x 6 companies I thought was much better off than having £300K? (i'm not saying £50K per se split, but a any lower amount than £250K)
Or do you mean there is an approach to have all the companies to be under a 'single entity' company? Is company hierarchy/relationship possible in Company house?

[sojan]

What are you asking a bunch of contractors about figures over quarter of a million pounds rather than a tax professional who specialises in this?

Even if any of our friendly accountants might read this I'm sure they are going to struggle to give you any worthwhile advice off the back of 5 lines and a question.

I understand. But when i spoke to Accountant, they are happy to have more companies as they get more money, but not sure they are well versed in 'tax advices'. Hence to a wider community with tax specialists.

[northernladuk]

I understand. But when i spoke to Accountant, they are happy to have more companies as they get more money, but not sure they are well versed in 'tax advices'. Hence to a wider community with tax specialists.

This is a contractor community with a couple of people that know more than most and the odd accountant that visits from time to time. AccountingWeb is your community with tax specilists.

I'm also pretty sure most decent setups won't give you incorrect advice in an attempt to drive more sales.

[eek]

But each company will be billing separate clients. so the actual relationship will be with individual companies & client and Circa £50K x 6 companies I thought was much better off than having £300K? (i'm not saying £50K per se split, but a any lower amount than £250K)
Or do you mean there is an approach to have all the companies to be under a 'single entity' company? Is company hierarchy/relationship possible in Company house?

Same shareholder / director is enough...

And details here after 1 second searching on google. https://mcl.accountants/news/associa...rporation-tax/

[Fred Bloggs]

And another cunning plan goes down the tubes........

[Lance]

[Fred Bloggs]

A regular trickle of them at the moment. I suppose we should be grateful or the forum wouldn't have half as many new topics each day.