Year End Tax Review 2009/2010 Contents Lead articles The year ahead... This year, next year Pension hit Employees Too much NIC NIC and pensions Company cars Tax-free benefits Business - General Time to incorporate? His and hers Family bonus Profit and loss Show me the money Can't pay, won't pay? Turning back the clock Business - VAT Standard VAT or flat VAT? VAT goes down - must come up? European revolution A good start for VAT Happy returns? Investments Top-up savings Rainy day money Capital Gains Gains favoured Splitting gains A place in the country Holiday lets end Families Family fortunes Where there's a Will Credits and debits Piggy banks Still trustworthy? Administration Penalty shoot-out Paperwork, paperwork Pay tax later Opportunity knocks again Charity Give and save Non-Domiciled People Home and away Interest Interesting times

Time to incorporate? National Insurance is an extra tax on salaries and business profits, even if politicians won't use the "T-word". Sole traders and partnerships can reduce the impact of NIC by forming a company and paying dividends instead of salary - dividends are not NICable. This is a complex decision, which should not be taken on tax grounds alone - many other factors have to be considered. There is more paperwork and law around running a company than an unincorporated business, but the tax savings may outweigh that. The rate of tax for small companies is supposed to be increasing from 21% to 22% in an attempt to even up this advantage, but the hike has been put off until April 2011. A sole trader making a profit of £45,000 in 2009/10 would have to pay about £10,994 in tax and NIC; someone running a small company with the same profit would only have to pay corporation tax of £8,090. That saving of about £2,900 will also apply in 2010/11, and is likely to more than pay for the extra paperwork. Action Point! Have you considered incorporating your business?