Spring 2011 Newsletter Content Leading article... Anything up his sleeve? General tax... Relaxed association File under 'e' Research costs? Give early A tax on houses Pension changes Holiday entitlement EISy money VAT... 20:20 vision Horses for courses? Do it yourself That's entertainment All in the contract? Where am I? Law items... What's in a title? The privileged few Called to account Don't mince words

Relaxed association Companies that make small profits – up to £300,000pa – pay a lower rate of corporation tax. From 1 April 2011, it will be 20% against 27% for a company making over £1.5m, with a complicated calculation for those in between. If two companies are 'associated', they have to split the limits between them, so they pay higher rates on lower profits. Companies are associated if the same people control them. The rule stops one person dividing £1.5m between 5 companies and paying 20% on all of it. 1 April 2011 sees an important change to these rules. Up to now, an individual has been treated as owning shares of close relatives and partners. If the companies had nothing else to do with each other you could ignore some relationships, but two companies separately owned by a married couple would always have to split the limit. From 1 April, relatives' shares will only be counted if there is 'commercial interdependence' between the companies. That's a welcome change: it means a small business won't be penalised because of a random connection. Meanwhile, a case has highlighted the rule that 'control' isn't just about shareholding – it includes being entitled to more than half the assets. Someone who holds less than 50% of the shares, but has made a large loan to the company, is likely to be treated as controlling it. If they also control another company, the two will divide the profits limits, even if they are completely separate businesses. If you have shares in more than one company, it's important to think about the tax rates that they will pay. We can help you count the associations and tell you what the rule change means.