Every year do you think about how your business could be more tax efficient? Let 2017/18 be the year that you are ahead of the game! Here are some areas you should consider prior to the year end on Wednesday 5th April.
- Secure your future income
For those planning for life after work, there are a number of ways to limit the amount of tax you pay. The government at present allows a tax free pension allowance of up to £40,000 for the tax year. To qualify for the government’s state pension, you must have paid or been credited with national insurance contributions (NIC). Currently you will only start paying NIC when you are earning above £155 per week. The state pension is currently £115.95, which will increase to £155.65 per week under the new state pension regime.
- Reward yourself with dividends
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- Set money aside for a rainy day
Make use of the government’s generous annual entitlement to every UK saver through an Independent Savings Account (ISA). Many people use these to buy new cars, homes or to help support their children at university. At present, there is an annual allowance of £15,240 which can be paid into a stocks and shares ISA, or into a Cash ISA or any combination of the two. You pay no income tax on the interest or dividends.
- Pay for the childcare and save tax
If you are a parent with young children then you might want to make use of the government’s child care vouchers, if your employer is enrolled in the scheme. You have the potential of avoiding paying tax on £55 per week. This allowance is allocated to each parent and as a result a couple can avoid paying tax on £110 per week. For the basic tax rate payer, you have the potential to save £930 per year on income tax and national insurance.
- Realise a few of your hard earned gains today
Make the most of your capital gains tax allowance (CGT). To reduce the risk of incurring a significant capital gains tax bill in later years, it may be advisable to use your CGT allowance which at present is £11,100 per annum. This amount cannot be carried forward, therefore you must use it or lose it.
The above examples highlight a number of ways to assist with effective tax planning for small business owners. This list is by no means exhaustive and there are a number of other tax effective mechanisms to help you preserve wealth. Want to know more? Contact RBL today to set up a meeting that is convenient to you with one of our trusted advisors 02895320155 | firstname.lastname@example.org