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Autumn Statement overview06-Dec-2013
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A Christian care worker, Celestine Mba, has sought a ruling from the Court of Appeal allowing he..
Christmas and New Year Opening Times06-Dec-2013
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HMRC Clamps Down on Landlords06-Dec-2013
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MANCHESTER law firm Kuits has advised on the agreement to produce a major film documentary about..
It’s all in the Name06-Dec-2013
As part of the ‘Red Tape Challenge’ to reduce the raft of unnecessary regulations im..
HMRC crack down on unpaid internships HMRC has written to more than 200 employers who have rece..
Kuits advises on 'Class of 92' production02-Dec-2013
Manchester Solicitors Manchester law firm Kuits has advised on the agreement to produce a major ..
John McCririck's age discrimination claim dismissed A Tribunal has dismissed John McCririck&rsq..
What a Landlord does not want for Christmas28-Nov-2013
In the run up to Christmas there will be a real temptation for rogue traders to gain access to e..
Case Law Bulletin: Young-v-Young 27-Nov-2013
The long-awaited high profile “big money” divorce case of Young v Young finally reac..
Commercial Landlords – Time is Ticking20-Nov-2013
As from 6th April 2014 landlords will no longer be able to use the ancient common law remedy of ..
The Vantage Point building in Manchester's Spinningfields district has changed hands for £..
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Employment Law – Winter 2013 Update19-Nov-2013
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Vantage Point sold for £19.9 million 19-Nov-2013
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In Press - TheBusinessDesk.com - Kuits advises University of Salford on Santander opening13-Nov-2013
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Charities Relieved by Court Ruling05-Nov-2013
Commercial Property Solicitors The Court of Appeal (in the “Pollen Estate” case) has..
Direct your Attention to Direct Marketing01-Nov-2013
Manchester Solicitors The Information Commissioner’s Office (ICO) has recently released ne..
Government Announces Plans to Relax Entertainment Rules The Government announced on 23rd October..
FAMILY business suffers something of an image problem in the UK, with many seen as staid, conser..
Is the Break Tide Turning?01-Nov-2013
Property Litigation Solicitors When the break date within a rental agreement falls in the middle..
Payments to Incorrect Payees01-Nov-2013
Manchester Solicitors A recent case has offered comfort to banks that have processed CHAPs payme..
High Court rules that a contract can be made in two different jurisdictions In the recent case o..
Manchester Solicitors Manchester law firm Kuits Solicitors has advised family run restaurant gro..
Kuits advises Daily Internet plc25-Oct-2013
Manchester Solicitors Manchester law firm Kuits Solicitors has advised AIM listed web hosting pr..
Rent Arrears – Options for Landlords15-Oct-2013
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Bankruptcy Tourism explained09-Oct-2013
Recent reports have highlighted a growing number of EU nationals moving to the UK to utilise the..
Manchester law firm Kuits Solicitors has advised Delta Properties on the £3.9 million purc..
Construction Law Update01-Oct-2013
Site Waste Management Plans Regulations to be Repealed On 1st October 2013, DEFRA are to..
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The results are always exemplary. Kuits performance has clearly added value to our business.
Clive Ashcroft, head of Legal Services, Land Securities PLC
Redeemable Preference Shares10-May-2013
It is not uncommon for private family companies and other privately held businesses to have significant loans due to their directors. They are a method of investing in a company but allowing for tax efficient extraction of profits at a later date and often date from the incorporation of the business.
Directors loan accounts allow for tax efficient extraction of profits from a business for higher rate tax payers rather than them paying a salary, bonus or dividend. Profits can be distributed as a part repayment of the directors loan and will suffer no tax in the directors hands. The effect of this is that whilst the company will have paid Corporation Tax on profits this is normally much less than the income tax the director would have paid themselves.
However, upon the death of a director the loan account may be subject to Inheritance Tax potentially at 40%. The payment of this tax needs to be found from somewhere and often requires a part repayment of the loan to fund it and this could put the company under financial pressure.
It is however possible to structure director's loan accounts as redeemable preference shares rather than a loan. The effect of this is that the shares can still be redeemed in the same way as loans in a tax efficient manner but once the shares have been held for 2 years they should qualify for relief from Inheritance Tax. In addition, no tax would be payable on the death of the holder.
Redeemable preference shares typically have a fixed value regardless of the performance of the company. However, the main downside when compared to a directors loan account is that if the business became insolvent the shares would rank below a loan on winding up and thus putting capital at greater risk.
However, as part if long term Inheritances Tax planning redeemable preference shares can play a great role in tax mitigation.