For many smaller ‘low risk’ businesses, the ability to run costs such as a car through the LLP without it being taxed as a benefit in kind on the individual is often overlooked simply because the headline rates of income tax on profits drawn are higher than for dividends.
An LLP still limits personal liability and has the flexibility for members to alter the profit share each year to make full use of individual income tax bands and allowances. Those very income tax bands that will be frozen come April until 2026.
The decision to set up a business felt like it used to have a default option. Even though it might have not been the best option in all cases anyway, now more than ever it seems there is a need for advice on how to structure your business and earnings to get yourself in the optimum position for support if that becomes necessary.
Never mind the advice gap, there is a tax advice gap too.
Charlene Young, senior technical consultant at AJ Bell