Its just deferring any tax liabilities to the future, possibly at higher tax rates when you extract the money from the top company. If you are higher rate taxpayer and you want to extract money from the top company then probably dividends would be the cheapest option but that would be at 33.75% which is higher than the 21% rate you showed on your video for a sale after April 2026.
@@davemartin4926 if the top co was used to supplement pensions and other sources of income then the dividends could be paid at only 8.75% if still in basic rate. If ‘husband and wife’ company even better
Personally I'd just abolish it and raise CGT rates to income tax rates. I don't think it works to encourage people to start businesses. It's an inefficient big dollop to business people that want to retire. I think it would be better to raise the revenue and if you want to encourage businesses to set up a BIG tax free side hustle personal allowance for people in PAYE employment but do their own project on the side. £10/15/20k. That would benefit people who want to set up businesses now rather than in 20 years time.
Its just deferring any tax liabilities to the future, possibly at higher tax rates when you extract the money from the top company. If you are higher rate taxpayer and you want to extract money from the top company then probably dividends would be the cheapest option but that would be at 33.75% which is higher than the 21% rate you showed on your video for a sale after April 2026.
@@davemartin4926 if the top co was used to supplement pensions and other sources of income then the dividends could be paid at only 8.75% if still in basic rate. If ‘husband and wife’ company even better
Hi Simon, does BADR only apply to assets or cash on hand in a company bank account?
@@SROrignal it applies to the disposal of shares in the company
Personally I'd just abolish it and raise CGT rates to income tax rates. I don't think it works to encourage people to start businesses. It's an inefficient big dollop to business people that want to retire. I think it would be better to raise the revenue and if you want to encourage businesses to set up a BIG tax free side hustle personal allowance for people in PAYE employment but do their own project on the side. £10/15/20k. That would benefit people who want to set up businesses now rather than in 20 years time.