Tax planning ideas

Is the legal structure of your business the most tax efficient for your circumstances? For example trading as a Limited company will allow you to pay shareholders dividends, reducing your national insurance costs and potentially your tax bill.

If your are a sole trader have your considered becoming a partnership, perhaps making your spouse or civil partner an existing employee. In this instance you could then share the profits to tax with your new partner, potentially reducing your national insurance costs and tax bill. In addition this should minimize your exposure to capital gains tax when you come to sell the business.

Do you have family members or friends who help you out in your business? If they are not utilising their existing personal allowances, consider paying them, this will reduce your taxable profits and likely your tax bill.

If you are a new business, have your claimed all possible tax deductible expenses? In some cases it is possible to go back as far as seven years in claiming pre trading expenditure.

If you are claiming capital allowances that are wasting personal allowances consider reducing your capital allowances claim.

If possible, time your capital expenditure purchases to make maximum use of your available capital allowances.

Are you using the most cost and cashflow effective VAT regime for your business? For example the cash accounting, flat rate, annual accounting or standard schemes.

If you have made a loss, have you carried back the loss to offset against profits or incomes made in previous years?

Have you considered your inheritance tax position? Making a will and dividing your estate so as to utilise the nil rate band, transferring the remainder to your spouse or civil partner. In addition, are you utilising your annual gifts of up to £3000 per tax year which become free of inheritance tax in any event.

These are just a few of the vast array of tax planning measures which are available to you as a taxpayer. For a free consultation as to how we could help you please do not hesitate to contact us to organise an appointment.

Please be aware all of the suggestions made above are purely illustrative. The possibility for their implementation and effectiveness will depend on your individual circumstances.

Some of these measures could have now been made ineffective by new regulations.

You should always consult a qualified accountant before pursing a tax planning strategy.