What rate of tax applies?


For individuals, individual partners and individual members of an LLP business, the rate of income tax will depend on the individual's personal position, but is likely to be assessed at 40% (higher rate) or 45% (top rate). National Insurance may also be due.

Companies pay corporation tax at 20%, but in normal circumstances additional tax will be due on the transfer of surplus profits to an individual.

The normal approach when surplus profits are moved from a company into individual hands is for this to be done via dividend payments. The current tax rates for dividends above the annual allowance are 32.5% (higher rate) and 38.1% (top rate). This produces effective cumulative tax rates of 46% or 49.52% respectively for taxable profits.

This outline demonstrates how wind turbine owners can face quite high rates of income tax year by year.

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