Corporate partner

12 April 2011

Issue: 4300 / Categories: Forum & Feedback , Companies , Income Tax

A family – parents and three sons – trade as a dairy-farming partnership and are considering the introduction of a limited company to mitigate their income tax liability

I act for a profitable dairy farming partnership which consists of five partners (the parents and their three sons). The land and farmhouses are owned jointly by all five partners and are farmed under a gratuitous licence.

Profits are approximately £300 000 per annum and I am considering introducing a limited company as a partner to help reduce their income tax liability. Views would be welcome on the following aspects.

First should I be concerned at the loss of the £100 000 annual investment allowance which from 6 April 2012 will only be £25 000?

Secondly is a commercial purpose for the introduction of the limited company required? If so do readers have any suggestions/examples?

Thirdly as profit is allocated to the company a cash balance will arise in the company and it is intended to spend this...

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