The Profit Options calculator provides an indication of the net benefit should a Company have available profits that are;
- Distributed as Salary or Dividends and invested in a combination of ISA and/or either a Collective or Onshore Bond or Offshore Bond, or
- Contributed to a Pension plan, or
- Retained in the company which are then invested in either a Collective, Onshore Bond or Offshore Bond.
And the net benefit of these options at retirement taking into account any taxation payable at that time.
It will also take into account;
- The individual’s taxpaying status now and at retirement,
- Assumed Corporation Tax rate of 19%, 26.5% and 25%,
- Whether any Tax Free Lump Sum amount / Lump Sum Allowance is available at retirement,
- If disposal will qualify for Business Asset Disposal Relief (BADR), and
- Expected investment (income and capital) growth rates
Business Asset Disposal Relief (BADR)
When all or part of the business is sold, the disposal may qualify for BADR (Previously known as Entrepreneurs’ Relief before 6 April 2020) which could result in less Capital Gains Tax becoming payable when all or part of the business is sold / dispose of.
If disposal qualifies for BADR, CGT rate is 10% in 2024/25, 14% in 2025/26, and 18% in 2026/27. If disposal does not qualify for BADR, the CGT Rate for an individual will apply.
To qualify for BADR, certain eligibility requirements that are needed; www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-business-asset-disposal-relief-2024
Qualifying capital gains for each individual are subject to a lifetime limit, currently, of £1 million.
