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Year End Tax Review 2004

Company or trade?

Since Gordon Brown announced in April 2002 that NIC would increase significantly on 6 April 2003, there has been a great deal of interest in ways to mitigate its impact. One way open to sole traders and partnerships is to form a company and pay out dividends instead of salary - dividends are still not subject to NIC. This is a complex decision, which should not be taken on tax grounds alone - many other factors have to be taken into account. But the tax figures are definitely biased towards incorporation at the moment.