With a relatively short time left before the end of the current tax year, now is the time to be undertaking some serious year end tax planning prior to the forthcoming 5th April.
Ideally, you will want to take advantage of all reliefs and allowances, reduce your personal tax rate and plan for the future in a tax efficient manner.
Here are some simple steps for you to consider:
- Review your existing dividend/salary/benefit mix with your accountant. Are these the most tax efficient?
- Consider deferring or bringing forward remuneration. The timing of these payments can have a substantial effect on your year end tax bills.
- Review any directors’ loans and advances. Should these be repaid prior to 5 April?
- Ensure that you use up your personal ISA allowance.
- Consider transferring assets between spouses to minimise overall tax liabilities.
- Discuss pension contributions with your IFA. As well as providing an income on retirement they can reduce current tax liabilities and shelter future growth from the tax man.
- If you are a higher rate taxpayer Gift Aid donations will not only benefit good causes but also reduce your tax liability.
- Where appropriate claim to reduce your Tax Payments on Account for 21/22 due 31 January and 31 July 2022.
- Review capital expenditure requirements. Currently there is a 100% Annual Investment Allowance on qualifying expenditure for the first £1,000,000 of expenditure in a year and a 130% super deduction on plant and machinery for companies.
- Where there are the potential for capital gains, use the annual capital gains tax allowance of £12,300 as this cannot be carried forward.
- In order to minimise Inheritance Tax on your death use up your annual Inheritance Tax exemption of £3,000, Small gifts exemption of £250 per person, and Gifts out of income exemption.
Of course, everyone’s circumstances are different and if you would like advice tailored to personal circumstances please speak to one of our tax team.