Tax efficient business structuring

You’ll have many issues to consider when deciding whether to trade as an unincorporated business or to incorporate, and in what entity type. The best arrangement for your needs may involve takeovers, mergers, demergers, partitions, and/or other reorganisations.

There are many ways in which you can structure a business in the UK. For example, you could run your business as a sole trader, as a partnership, as a Limited Liability Partnership (LLP) or through a company, each of which will have pros and cons. You can also hold assets in your own name or in the name of your personal investment company or trust

The decision will be governed by a number of commercial and other factors, such as the need for limited liability and the taxation consequences.

For example, setting up and running a company involves more formalities than operating a partnership, but generally provide greater flexibility. For example, they offer a means of deferring the income tax of the owners if profits are retained in the company.

RSM can help you to decide what form of ownership vehicle to use for the activities you intend to carry on. This will include a review of the likely income tax, capital gains tax and inheritance tax implications.

Company reorganisations are undertaken for many different reasons. The primary driver is usually to achieve commercial objectives, but tax efficiency is always an important consideration. For example, tax is likely to influence the method of effecting the transaction whether you are:

  • changing your share structure;
  • transferring assets within a group;
  • acquiring or selling a subsidiary;
  • splitting the business; and 
  • making a large one-off return of value to shareholders.

RSM can provide an overview of the key tax issues, set out a practical solution that achieves your commercial objectives, and ensure that you carry out the reorganisation without paying unnecessary tax.

Please get in touch with us for more information about how RSM can help you structure your business for optimal tax efficiency.