Is there any way my soletrader client can avoid higher rate tax in 2014/15.

Ryan Mundy MAATRyan Mundy MAAT Just JoinedSouth WestPosts: 22MAAT, AAT Licensed Accountant
Hi

My new client incorporated in Sept 2014, but is running his old sole trader accounts to 5 April 2015 (commenced April 2014) and then ceasing.

He also received a final dividend during 2014/15 from a company he was, but is no longer a shareholder of.

His income for 2014/15 is as follows:

Sole Trade Profit = £29,000
Dividend = £20,695 (net)

Company profit to date is in the region of £100k, but not relevant for this question.

Is there any way my client could avoid paying higher rate in 2014/15?

I know there isn't much time left, but I wonder if a pension contribution might do it. Or perhaps, there is some way he could transfer profits into the Ltd Company.

Thank you.

Comments

  • burgburg Experienced Mentor GloucesterPosts: 1,440Moderator, FMAAT, AAT Licensed Accountant
    I was going to suggest any new assets but as he is ceasing to trade its not really an option. It seems as though realistically pension conts or gifts to charity might be the best options.
    Regards,

    Burg
    MarieNoelle
  • Ryan Mundy MAATRyan Mundy MAAT Just Joined South WestPosts: 22MAAT, AAT Licensed Accountant
    edited March 2015
    Is it too late, or would it be allowable, to split his period of account (April 14 to April 15) into two accounting periods?

    April 14 to Sept 14 (assuming 6m is the shortest) - profits on 2014/15 TR
    Sept 14 to Aug 15 - profits on 2015/16 TR

    Client is still registered self employed, but trade ceased around October 2014.
  • KernowAccountantKernowAccountant Settling In Nicely Posts: 120Registered

    Is it too late, or would it be allowable, to split his period of account (April 14 to April 15) into two accounting periods?

    April 14 to Sept 14 (assuming 6m is the shortest) - profits on 2014/15 TR
    Sept 14 to Aug 15 - profits on 2015/16 TR

    Client is still registered self employed, but trade ceased around October 2014.

    Where a trade commences and ceases in the same tax year (which it appears it has as a matter of fact) the basis period for that tax year is the duration of that trade. So no, it is not "allowable".

    Why do you intend preparing accounts for a period after trade has ceased?
  • Ryan Mundy MAATRyan Mundy MAAT Just Joined South WestPosts: 22MAAT, AAT Licensed Accountant


    Where a trade commences and ceases in the same tax year (which it appears it has as a matter of fact) the basis period for that tax year is the duration of that trade. So no, it is not "allowable".

    Ok. Thanks for your help.

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