Corporation tax and dividends

[SolomonD]

I just want to check if this is true after a recent conversation

If you own a GB company, you will be taxed 19% on profits, which you can then distribute as dividends to UK residents (£2k allowance and then marginal rate)

If you have a Jersey company, then the corporation tax would be 0% while the dividend tax would be the same?

 

[GLAbusiness]

The CT is a tax on the company. The tax on dividends is a tax on the shareholder. very different things.

 

[SolomonD]

Agreed however for a export orientated business the end result to owners could be significant.

 

[WaveJumper]

Tax And Contributions | Locate Jersey

0% - 10% Business tax, 20% max personal tax, No CGT or IHT, 5% GST, no VAT. Discover how relocating to the Jersey can benefit you, your business and your family

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Tax on dividends

How you're taxed on dividend payments and how your income affects the amount of tax to pay

www.gov.uk

 

[Robert NW]

Your thinking is correct in principle... UHNW families habitually hold their assets through companies in offshore locations for this reason and others.
But you will not able to DIY this.
There is substantial anti avoidance legislation on the transfer of assets abroad, how HMRC can deem the actual residence of a company determined by control and management, and inter-company pricing. As an example, let's say you already have a business in the UK and want to re route it through a Jersey company, read this

INTM600020 - Transfer of assets abroad: Overview of ITA2007/Sections 721 and 727 (‘Income Charge’) - HMRC internal manual - GOV.UK

www.gov.uk

If you are not UK resident, then the above has to be amended for the local tax law.

Broadly, if you've got 1m turnover it's worth looking at especially if you are not UK domiciled. But, it is beyond the standard training of company accountants, so as I said you will need to keep a CTA on call on a retainer. Although, actually if the turnover is 1m you'd probably save more bottom line profit by planning the VAT carefully.

Tax is not an area where there are many well trodden paths.... there are thousands of improvements to use, but they're usually case-particular. A good tax planner is always creating a new answer because everyone is different, especially cross border. You can find a well qualified tax specialist at the Chartered Institute of Taxation.

 

[Bobbo]

If you have a Jersey company the Jersey corporation tax would be 0%, but if you are deemed to be managing and controlling the company from the UK you may find the company still has to pay UK corporation tax at 19%.