Entrepreneurs can still protect wealth despite tax burden
Date published: 26 February 2011
RSM Tenon is urging entrepreneurs in the North West to take action to protect their wealth now, before further changes to tax obligations arrive in April 2011.
RSM Tenon is advising clients to review the medium-term tax planning of their business and personal wealth before changes to tax relief on pension contributions and the increase in National Insurance contributions cause further headaches for high earners from 6th April 2011.
Recent statistics from HMRC show that a small group of only 15,000 high earners in the North West are required to pay the 50 per cent top rate of income tax. This group is part of a select number of 275,000 people in the UK that earn over £150,000, whom the Government is increasingly relying on to generate up to 25 per cent of all UK income tax gathered by the HMRC.
Steve Crompton, tax director at RSM Tenon in the North West, commented: “The tax burden is tough on entrepreneurs who have worked hard to create their wealth, but they must not feel that every door is locked. We recognise that taxes are not going to fall in the foreseeable future, but high earners can be smart and plan ahead to protect future earnings.”
Options open to high net worth individuals that a tax expert can help with include evaluating trading structures to remove tax inefficiencies and putting in place share schemes so that an individual leaving a business is taxed at a much lower rate than 50 per cent. Tax advisers can also highlight alternatives to traditional pension planning.
Mr Crompton added: “The financial life of an entrepreneur has never been so complex, and it can often feel like a situation of not being able to see the wood for the trees, but there are the expertise and opportunities in place to ensure that the majority of wealth generated is to take home. At RSM Tenon, we recommend that high earners look to find working solutions sooner rather than later.”
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