Pictured above: Susheel Gupta
A leading corporate tax specialist at law firm Higgs & Sons
is urging shareholders in private companies to take advantage of
current low Capital Gains Tax rates, ahead of anticipated
rises.
With CGT rates as low as 10-18 per cent, now is the perfect time
to seriously consider succession planning, according to Susheel
Gupta, partner at Higgs & Sons.
Susheel said: "We have already seen income attacked with the new
50 per cent rate, which comes into force in April, and further
increases are already announced for April 2011.
"The budget deficit is expected to exceed £170 billion. We
can expect more tax rises in the pre-election budget due this March
and, almost certainly, significant tax rises in a post election
budget. Accordingly, the relatively low capital gains tax rates
currently enjoyed are an easy target for the Chancellor."
Susheel suggests where shareholders have a succession route
already in mind, be it to other family members or to a management
team, they must ask how long will CGT rates stay as they are.
He adds: "Where the price is right we can structure the deal to
crystallise clients' capital gains tax liability at the current low
rates. In six months time it may be too late."
Similarly, other simple tax planning measures should be taken to
mitigate their tax exposure, advises Susheel. "Business owners are
facing a double whammy where turnover is down but tax rates up, but
there are simple measures they can take to help them through this
situation."
Ways to minimise tax exposure include:
· Ensuring the correct business structure is
in place to maximise effective tax rates at business, shareholder
and employee level
· Accelerating income payments, dividends
and/or bonus payments to fall before 6 April 2010 (i.e. whilst the
top rate of income tax remains at 40 per cent)
· Where possible, dividing share ownership
between family members or other business entities to maximise tax
reliefs that may be available
· Keeping key staff incentivised through the
use of tax efficient share schemes while cash flow is tight.
Susheel emphasises how tax planning in the current climate has
never been more important, with a number of measures available to
businesses to save money. Companies wanting to find out more can
contact Susheel Gupta at Higgs & Sons on 01384 342 100.