EPPs, Furbs and basis years for salary all help in tax planning for pensions but the forthcoming Green Paper could make any such planning suitable only in the short term
The National Insurance increase due in the 2003-4 tax year further focuses the debate on whether remuneration for directors and high earners should be in the form of salary or dividend. Taking remuneration as dividend offers a number of advantages. It is usually more tax efficient, even for higher rate tax payers, where the company profits are taxed at 19% (profits between £50,000 and £300,000 a year). Tax benefits also arise from the fact neither the employer nor the individual pays National Insurance contributions on the dividend declared. A further advantage is that dividends may be re...
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