BUSINESSES in York could save a massive £7.3m in tax and national insurance payments by converting to limited companies, according to new research.
The potential savings, which affect sole traders and partnerships which choose to convert, arise from changes in how limited companies are taxed and recent alterations to tax legislation which became law on July 26, says North Yorkshire accountants, David Smith Crosswaite (DSC), which has carried out the study.
Harrogate-based DSC calculated the potential savings by applying an Institute of Fiscal Studies estimate of a £2.5 billion cost to the treasury if all eligible UK self-employed take advantage of the tax savings to local populations detailed by the National Statistics Office.
The 177,400 York population is 0.29 per cent of the total UK population and £7.3 million tax savings represents 0.29 per cent of the total Institute of Fiscal Studies figure.
Simon Pease, DSC partner, said: "Many small businesses are unaware that they are paying far too much tax. For example, a sole trader with profits of £14,615 per year is typically paying income tax and national insurance totalling £2,774 per year. Most sole traders with this level of profits don't need to pay any income tax or national insurance at all.
Updated: 09:39 Tuesday, September 24, 2002
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