With the end of another financial year in sight, are you sure you\u2019ve utilised all the opportunities to minimise your tax burdens?<\/p>\n
Manchester based accountants, Jack Ross would like to highlight a number of year end tax planning opportunities that could potentially help your company make substantial tax savings.<\/p>\n
Some maybe appropriate for you \u2013 others may not \u2013 but they are definitely worth a look!<\/p>\n
Bringing Forward Costs<\/strong><\/em><\/span><\/p>\n Perhaps you could consider bringing forward staff bonus payments, review provisions against bad debts or accelerate \u201cdiscretionary\u201d expenditure such as building maintenance, advertising, purchasing business assets (see Capital Allowances below).<\/p>\n Capital Allowances<\/strong><\/em><\/span><\/p>\n When assets are purchased for a business, such as machinery, office equipment or motor vehicles, capital allowances can be claimed which will go towards reducing a company\u2019s taxable profits.<\/p>\n Capital allowances are given at different rates. The Annual Investment Allowance (AIA) is the most generous, providing a 100% write off on most types of plant and machinery, but not cars, on spend up to \u00a3500,000 per annum for a period of two years ending 31st\u00a0December 2015. Thereafter the AIA drops to \u00a325,000 per annum.<\/p>\n In addition to the AIA an enhanced 100% capital allowance is available on energy efficient plant and low emission cars.<\/p>\n Should you be think of purchasing business assets then consideration should be given to the timing of the purchase. You may also be considering purchasing or changing company cars, in which case thought needs to be given to how green the car is and the effect on capital allowances.<\/p>\n Directors Loan Accounts<\/strong><\/em><\/span><\/p>\n As a director\/shareholder you may have loan advances made to you by the company (e.g. your personal expenses paid by the company). These are accounted for via a directors\u2019 loan account with the company which may become overdrawn.<\/p>\n If the directors\u2019 loan account is still overdrawn nine months after the accounting year end then a tax charge of 25% will be levied on the company.<\/p>\n It should also be noted that if the loan account is overdrawn by more than \u00a310,000 then a taxable benefit-in-kind will arise on the director.<\/p>\n Due to the tax implications for the company and the individual it is advisable that the loan accounts are cleared as soon as possible \u2013 this will help to reduce the benefit-in-kind and tax charge arising on the director.<\/p>\n Extracting Dividends from the Company<\/strong><\/em><\/span><\/p>\n For the year ending 5th\u00a0April 2015 the basic rate tax band is \u00a341,865 (this increases to \u00a342,385 from 6th\u00a0April 2015). If an individual receives dividend income up to the basic rate tax band then they will have no additional tax pay on the dividend.<\/p>\n If the company has sufficient funds then dividends should be extracted to make full use of an individual\u2019s basic rate tax band.<\/p>\n Benefits-in-Kind<\/strong><\/em><\/span><\/p>\n Providing benefits-in-kind (company car\/fuel, medical insurance etc) to directors\/employees can be costly to both the company and the individual. The company may be liable to Class 1A National Insurance (13.8%) on the cost of providing the benefit and the individual will be taxed on the benefit. It may be worthwhile considering if the benefits are actually beneficial or whether they can be provided more effectively.<\/p>\n On a compliance point if you provide directors\/employees with benefits-in-kind or reimburse expenses then you will need to submit and annual P11D return to HM Revenue & Customs. This can be a particularly onerous annual procedure. Our Manchester team at Jack Ross can assist with these \u2013 call us today on 0161 832 4451 for more information.<\/p>\n