Ian Sergeant, our staff accountant, says…

It has been well publicised in recent times that HM Revenue & Customs are targeting aggressive tax avoidance schemes however there are still a number of ways small companies and individuals can minimise their tax bills.  Below is a list of ideas worth considering if you wish to reduce you tax bill.

 

Companies

Making pension contributions through the company should be considered.  Not only does this build the director’s pension fund for later life, it is also a tax deductible expense for the company.  That is provided that HMRC don’t rule the contributions in excess of what is commensurate with the directors’ duties.

When purchasing capital assets the use of the annual investment allowance should also be considered before the year end.  Since 1^st January 2016 AIA is £200,000 per year.  This covers all plant and machinery assets except cars, meaning that the cost of capital assets reduces taxable profits for the year.

 

Individuals

 

Ensure that you are making the best use of ISA contributions available to you each year.   The annual limit which can be split between cash ISA’s or stocks and shares ISA’s is £15,240 per year as of 6^th April 2015.  Any earnings generated from ISA’s are tax free.  Help to buy ISA’s are another form of ISA which have been introduced this year.  These allow prospective first time home buyers to claim an extra £50 for every £200 invested (upto a maximum of £3,000).

Pension contributions are another way of reducing your tax bill. Soon all employers in the UK will have to offer a pension scheme to employees.  The contributions made to an employer pension scheme can either be taken from your gross pay before any tax is deducted or if the contribution is paid net the pension provider claims back basic rate tax at 20% and adds this to your pension pot.

 

For self -employed people this isn’t an option, however if you are paying tax above the basic rate band, making personal pension contributions can also be of benefit.  The contributions made extend the basic rate band and therefore more of your earnings are taxed at 20% rather than 40%.

 

These are just a few simple ideas in order to try and help you minimise your tax bills, and it is key to act before any tax period ends.  So if you would like any further assistance with any tax advice then please let us know.

Rebecca Bradshaw, our Director, says…

Happy New Year. We hope all our clients and friends had a fantastic Christmas and we hope 2016 will be a year of prosperity for all.

As we all know January is tax return season and is usually our busiest month as we try to tackle all the last minute panics and get everyone’s returns filed on time. Truth be told our track record is pretty good and in the last few years our failure to file tax returns have usually been when we haven’t received the information before 31^st January and although we are good, telepathy is not our strongest point and we don’t believe in a fictional tax return!

As well as trying to give us a quieter January so we can dwell on our post-Christmas blues, there are a couple of reasons why we proactively chase (nag!!)  our clients to get their tax return information in as early as possible

 

1)      Forewarned is forearmed

After an expensive Christmas the last thing anyone wants is a nasty surprise in the form of a huge tax bill.

The earlier we get the information the earlier people can make plans to pay the tax or  apply for the tax to be taken from their employment income, should this be possible.

2)      Plan, plan, plan

If we receive someone’s tax return information on 31^st January they are already very nearly at the end of the next tax year and if we spot an opportunity then there is often not a lot of time to put something in place before the current tax year ends. A simple example of this being, we have seen a lot of people have their PAYE codes changed incorrectly and if this is not picked up early it can cause tax consequences for future years. Another thing to consider would be if a business is growing should the structure be changed ASAP to take advantage of lower tax rates, again this needs to be considered early to reduce the payment of tax.

3)      Cash is king

If you have payments on account to make and your profits drop because of a lull in trade or purchase of machinery etc. then these can be amended and the cash flow burden can be reduced.

We want our job as Accountants to be one of looking forward and helping our clients, not just ensuring tax returns are filed on time. If you are on the naughty list and haven’t yet completed your return, let us have the information as soon as possible and consider how next year could be different…it may just save you some money!

Nick Smith, our Senior Manager, says…

Our Director, Rebecca Bradshaw, is getting married this week and we all wish her and Dave a wonderful day and a very happy life together.

What an appropriate time for a quick re-cap of a recent governmental change to husband and wife tax planning opportunities!

If you and your partner were both born after 1935, you may be able to take advantage of the Marriage Allowance that the government introduced in April 2015.

This allows a couple to save up to £212 on their tax bill if all of the following applies;

• You are married or in a civil partnership
• Your annual income is £10,600 or less, plus up to £5,000 of tax-free savings interest
• Your partner’s income is between £10,601 and £42,385

To register your change in status and intention to claim, you can click here.