1st June 2018

With the start of a new tax year, now is a good time to start looking at your tax planning.

  1. Maximise the dividend payments to each shareholder : the first £5k is tax free, the next £43,000 (total income) pays tax at just 7.5% - still the most tax efficient way of getting money out of a trading business.
  2. Balance your director’s loan account to zero (overdrawn loan accounts attract an unnecessary tax on both the company and the individual)
  3. Reconcile cashflow – ensure you finish the year with enough cash in the business bank account to cover all your liabilities (allow for corporation tax at 19% of your profits)
  4. Stock Check – providing a record of closing stock will strengthen your balance sheet and reduce your taxable profit.
  5. Make contributions to your pension scheme – up to £40k for each director is an allowable cost - a higher rate taxpayer can turn every £6,000 they put into a pension into £10,000 before the 5th April
  6. Reimburse yourself for any business items and services that you have had to pay for personally, during the year: Business travel, Business mileage (45p per mile first 10,000 miles, 25p thereafter), Subsistence, Mobile phone, £4 per week (if you use any part of your home in your business).
  7. Look at your share structure - as well as spouses, adult children can be shareholders – and this often provides parents looking to support their children with a tax efficient way of doing so.
  8. Purchase assets for the business - 100% capital allowances are available on:
    • Commercial vehicles
    • Cars with a CO2 rating of less than 75g/km
    • IT equipment (computers, printers, smart phones)
    • Plant and machinery / Fixtures and fittings
    • (Purchase on finance rather than leasing, so you get the tax break on the full list price of the asset - as well as the VAT back)
  9. Run a debtors report and chase all outstanding money from your customers
  10. Bring forward any maintenance, improvements or renovations to your business premises
  11. Childcare costs up to £243 per month can be paid by the business
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