That Gift Horse Again

02 February 2005 / Keith M Gordon

Issue: 3993 / Categories: Comment & Analysis , Companies

KEITH M GORDON MA (Oxon), ACA, CTA, barrister explains a novel way for small companies to mitigate the effects of the non-corporate distribution rate.

SMALL COMPANIES CAN avoid the non-corporate distribution rate (NCDR) in two ways according to the Government. The first is by ensuring that the company delays paying dividends until it is making annual profits in excess of £50,000; the second is by not paying any dividends in the first place.

KEITH M GORDON MA (Oxon) ACA CTA barrister explains a novel way for small companies to mitigate the effects of the non-corporate distribution rate.

SMALL COMPANIES CAN avoid the non-corporate distribution rate (NCDR) in two ways according to the Government. The first is by ensuring that the company delays paying dividends until it is making annual profits in excess of £50 000; the second is by not paying any dividends in the first place.

The problem which seems to have been overlooked by the Treasury ministers is that most of the affected companies will never be in a position to make profits of more than £50 000 in a year. Allied to this is the fact that they are in the main owned by individuals who cannot afford not to extract profits from the company.

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