6 Top tax saving tips!
Don't Waste Personal Allowances
The ‘tax-free’ personal allowance(PA) for 2011/12 is £7,475, so consider taking steps to ensure that it is utilised. If your spouse or partner has little or no income, consider transferring income to them to ensure that personal allowances are being utilised. It is costly for one spouse or civil partner to pay tax at 40% or even 50% while the other pays at only 20%. Equalising income ensures you will both pay tax at the lowest rate, reducing the overall combined tax bill.
Review Your Capital Expenditure
The majority of businesses are able to claim a 100% Annual Investment Allowance (AIA) on the first £100,000 of expenditure on most types of plant and machinery (except cars). is a high ceiling but worth considering if your business is incurring substantial amounts of qualifying expenditure. There are specific 100% allowances
for some investments, including energy-saving equipment and low-emissions cars.
Consider Tax-efficient Savings and Investments
You have until 5 April 2012 to make your 2011/12 ISA investment. For adult savers the maximum in 2011/12 is £10,680, of which up to £5,340 can be invested in cash - 16-17 year olds can invest up to £5,340 in a cash ISA. The new Junior ISA, for under 18s who do not have a Child Trust Fund account, allows investment up to £3,600
in 2011/12.
Other options include the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs). The EIS allows income tax relief at 30% on new equity investment up to £500,000 per tax year. Capital gains tax exemption is also given on qualifying shares held for at least three years. VCTs mean Individuals investing up
to £200,000 a year in VCTs will be exempt from tax on resulting dividends and on capital gains when they dispose of shares.
Make Pension Contributions
Investing in a pension scheme, whether company or personal, allows you to enjoy tax breaks on your pension savings.
Utilise InheritanCe Tax (IHT) Exemptions
IHT is currently payable at 40% on total assets exceeding £325,000 at death. Make sure you utilise the annual exemption for gifts before 5 April. This is £3,000 for 2011/12. Unused allowance for 2010/11 may be brought forward after the 2011/12 allowance has been exhausted.
Consider a Company Van
Tax and national insurance costs could mean your company car may not be the most tax-efficient option. An employer-provided van may be an alternative to a car
- the tax charge is £1,200 plus up to £220 for fuel for those paying tax at 40%. It is worth reviewing the company car policy, it could prove beneficial to pay employees for business mileage in their own vehicles, at the statutory mileage rates.
Talk to us now for advice on making the most of the opportunities available to you and your business before the Year End – and beyond.