The directors trust,the money farm,EFRBS,profit retention,tax planning,corporation tax planning,IHT advice,how to reduce tax,corporate tax reduction,business planning,financial planning,financial advice,finances,UK income tax,tax strategy
The directors trust,the money farm,EFRBS,profit retention,tax planning,corporation tax planning,IHT advice,how to reduce tax,corporate tax reduction,business planning,financial planning,financial advice,finances,UK income tax,tax strategy
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To summerise
Study 5 - A comparison of investing personally or with an EFRBS.
Personally
If you had £10,00 of profit in a Company to pay out as a salary then reinvested the net amount at 7% per annum gross, the question may be how much will I have after 20 years?
£10,000 gross profit gives a net £5,230, assuming the individual is a 40% tax payer. 7% per annum gross growth is 4.2% net.
The answer is that after the Director has ,say, today £10,000 of money, after 20 years the investment produces only £11,908.
In fact it takes 16 years to get back to having a sum of £10,000.
Via an Investment Company owned by an EFRBS
Starting with with exactly the same amount of profit the Director has £10,000 within 5 years.
After 20 years the value is £22,769.
This is an increase of 91%
If you had £10,00 of profit in a Company to pay out as a salary then reinvested the net amount at 7% per annum gross, the question may be how much will I have after 20 years?
£10,000 gross profit gives a net £5,230, assuming the individual is a 40% tax payer. 7% per annum gross growth is 4.2% net.
The answer is that after the Director has ,say, today £10,000 of money, after 20 years the investment produces only £11,908.
In fact it takes 16 years to get back to having a sum of £10,000.
Via an Investment Company owned by an EFRBS
Starting with with exactly the same amount of profit the Director has £10,000 within 5 years.
After 20 years the value is £22,769.
This is an increase of 91%
If the start figure is £100,000 the example shows £125,00 more profit than holding the investment personally.