Individuals within a farming partnership are taxed on their share of profit at 20% up to £42,475 and thereafter the tax rate jumps up to 40%, increasing to 50% for profits over £150,000. Conversely those businesses operating through a company will see their tax liability at 20% on the first £300,000 of profits. Therefore, on the face of it why not incorporate your business to lessen the tax?
Rather than simply incorporating the farming business, which often can be inappropriate, there is another option that retains all the flexibility and privacy of their current business, whilst still saving tax. A Corporate Partnership is about having a hybrid structure involving a company as an active partner within the business. This structure can bring about significant tax savings. However, its correct implementation is key and so seeking out the proper professional advice on the operational and legal issues is crucial.
If you like this article and would like to subscribe to INSPIRED, our FREE monthly newsletter, then please click SUBSCRIBE.Subscribe