There are only 14 more days until the end of the 2012 tax year. There is still time to save some tax. The tax planning fact sheet below will give you some ideas.
Year end tax planner – 5th April, 2012
I would also like to remind you that sole traders and partnerships should buy capital equipment before 5th April, 2012 to obtain tax relief in 2011/12 tax year. Similarly, limited companies with a 31st March, 2012 year end will need to buy these assets before 31st March, 2012 in order to claim tax relief in the current year.
There are major changes to capital allowances in 2012/13. The Annual Investment Allowance is reducing from £100,000 p.a. to £25,000 p.a. There is also a nasty tax complication which may affect businesses with a non-March year-end. Please contact us if you plan to make significant asset purchases after 31st March so that we can advise you.
Please click on the link below to access our really comprehensive review of the Chancellor’s announcements yesterday.
There is lots of detail to follow and we will, of course research it all and identify any potential effects. Aside from the headline grabbers, it is disappointing to note the continued aggressive taxation of motor vehicles. If you have company vehicles, you need to consider some further tax planning.
The Shrewsbury Accountant’s review of March, 2012 budget
As always, if you need further advice, please do not hesitate to contact us.
As you are aware, the 5th April fiscal year end is approaching. This is a key deadline if you employ people or want to optimise your personal finances. We are pleased to give you some tax saving ideas.
- Is your payroll system in order and able to meet the HMRC online filing requirements?
- Are you ready for reporting benefits in kind on the P11D forms? There are significant fines. Would a dispensation be helpful?
- Have you correctly distinguished between employees and self-employed contractors?
- Suggestion schemes, long-service awards, removal expenses, medical expenses, mobile phones and bicycles are some of a number of tax-free benefits you can provide to employees.
Personal finance matters
- Have you maximised your pension contribution?
- Have you used up your ISA allowance?
- If you run a limited company, have you taken the “right” amount of salary and dividends?
- Have you used up your Capital Gains tax free allowance?
- Have you made tax exempt gifts for Inheritance Tax purposes? Are you following a plan to minimise Inheritance Tax?
- Is your will up to date?
- Would a low-emission company car be tax-efficient for you?
- Is your business structured correctly – could you save tax by becoming a limited company?
- Have you got protection against accidents and illness?
- Have you made a claim for tax credits?
- Have you considered the benefits of tax-efficient investments including Venture Capital Trusts and Enterprise Investment Schemes.
If you need further advice, please do not hesitate to contact us.
Many clients have found our business records checklist useful when assembling their paperwork. There is a link to the file below (pdf)
When you combine this with our purpose design record keeping wallets, you are really helping yourself save money by saving us time.
For most businesses, March is a vital time for business tax-planning to get things in place before the financial year end. Here is a list of our top tips:
- If you intend to purchase assets for use in your business (excluding motor cars but including vans), you should consider buying (not leasing), these assets before your year-end to reduce this years taxable profit. But be careful not to let the “tax tail” wag the dog.
- Similarly, for normal ongoing expenditure (e.g. repairs, professional fees and advertising), costs incurred before the end of the year will reduce the current years tax liability. However, this does not apply to stock items.
- Any staff bonuses that you pay prior to the end of your year will reduce your tax for the year. We can advise on minimising the national insurance cost of these bonuses.
- We can also reserve for a bonus in your accounts to qualify for tax relief this year, provided the bonus is actually paid within 9 months of the end of the year. We can also reduce your taxable profit by including staff holiday pay earned but not yet paid.
- If your spouse/civil partner/children over 13 work for the business, it is tax-efficient to pay a salary of £590 per month (£624 per month after 5th April, 2012) or maybe more, if they do not have other income (sole traders and partnerships not limited companies).
- Is there scope for salary sacrifice schemes benefitting you and your employees?
- If your sales in the year included unpaid sales that you consider will not be paid, we can make a provision to reduce your taxable profit by this figure. Don’t forget that you can recover the VAT on bad debts from HMR&C.
- If you have stock that you are unlikely to sell, we can write down the value to the likely selling price, instead of continuing to value at cost. This will reduce your taxable profits.
- Can any borrowings be restructured to maximise tax-relief.
- Have you considered changing to a limited company, we can give you a free-estimate of the likely tax-savings. (sole traders and partnerships only).
- Have you considered making a payment into a personal pension scheme?
- Do you need to start planning for the sale of your business?
For limited companies only
- If your spouse/civil partner/children over 13 work for the business, it is tax-efficient to pay a salary equal to their unused personal tax allowance.
- Has the company considered making a payment into a personal pension scheme.
- Have you taken the tax-efficient salary and dividend package? Are dividends properly documented?
- Will the year-end snapshot show the best possible picture of the company’s finances? This can improve the company’s credit-rating.
Please take advantage of our business health check which is available here. 2MinuteHealthcheck
If you need any further help. Please contact us.