Burning Question

SINCE THE BUDGET cuts in corporation tax and the announcements of National Insurance contributions increases to come in 2003-04 there has been a great deal of comment about the advantages of incorporation. The problem is that even the tax side of this is very complicated. I tried to create a spreadsheet that would calculate the tax savings to be made at different levels of profit but found that it defeated my programming skills and produced some strange results. Then I realised that this is a marginal costing problem which I well recall from when I was doing PEII (which is what it was called in those days).

First things first

The first step is to define the points at which the tax rates change.

It is necessary to make some simplifying assumptions because the rates are so complicated. This model will work...