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Tax Planning for the new financial year
Publication Date - Friday, April 08, 2011
When starting your new business you will already have a lot to sort through; new documents, lease certificates, possible employees etc. So dealing with a new Tax year could just add to the stress. To help you cope and manage your new Tax year effectively we have highlighted the main points that will help with your organisation throughout the year...
The start of a new Tax Year is always the time to think about personal tax planning opportunities – either to get in before the end of the year (5 April) or at the start of the new year (6 April). The position for companies of course generally depends on the company year end.
From a personal viewpoint you may want to think about some of the following:Have you made use of your ISA allowances for both years? Don’t forget the current limits are £10,200 in total and within this £5,100 can be in a cash element. Even if you can’t contribute by 5 April, it can still help to use the allowance early in the year. People who have fully used their ISA (and previously PEP) allowances over ten or more years can have accumulated over £1,000,000 in a tax free shelter Are you taking advantage of the reliefs available on pension contributions? This is a particularly complex area now, as the rules have been changing over recent years. Although the tax benefits can be significant, it is important to take good advice. Also bear in mind that the government is proposing to increase the flexibility allowed in how you take income from the scheme later. Watch out in the budget for confirmation of the changesIf it affects you, are you aware of the changes to the Working and Child Tax Credit systems from April 2011, and to Child Benefit from April 2012? For earners with income of £20,000 to £50,000, this could have a noticeable effect on your net income. From the business viewpoint it is always worth thinking about the tax impact of your decisions, particularly as you approach your financial year end Here are some thoughts for 2011:Can you provide your employees with tax free benefits in lieu of some salary? Consider employer pension contributions, life assurance, workplace parking. These can give you a worthwhile saving in Employers National Insurance, but they have to be set up properlyAre you planning any major investment in equipment or vehicles for your business? If so, getting the timing right can make a substantial difference to the cashflow impact of your tax bills. With forthcoming changes to Corporation Tax rates, and to the Annual Investment Allowance, it is important to take advice earlyIf you are still seeing the effect of the economic downturn on your profits, or are seeing a significant increase in profits, you may be able to get a tax refund - or delay paying tax - by changing your year end. It is always worth speaking to your accountant during the year and discussing your current trading so they can consider such potential opportunities. If you would like to discuss any of the above, please do not hesitate to contact us.
