Start-ups: Make use of your spouse’s tax allowances.
There are a lot of costs surrounding setting up your own business, so saving tax is a big concern for most clients. This can be done in a number of ways, through ensuring you are claiming all your business expenses. However there is also the consideration of utilising your tax free allowances. In the tax year ended 5 April 2016 you are entitled to receive £10,600 of income tax free. For a self-employed individual this would be their profits for the year plus any other income sources including salary from employment. Working for yourself may also give you the flexibility to utilise your partner’s allowances, by paying them a wage to assist you or you could consider going into a partnership. HMRC have also brought in a new marriage allowance for the tax year ended 5 April 2016. If yours or your husband, wife or civil partner’s income is less than £10,600 in year to 5 April 2016 you may be able to reduce your tax by up to £212 a year by transferring some of your personal allowances.
To some people this may not sound like much however with all the costs of starting a business this may be something to look into. Particularly if your profits are expected to be low in your first year of trading or perhaps your husband or wife does not currently utilise their allowances. In order to qualify both the Husband and Wife need to be basic rate tax payers.
Should you wish to discuss the many other ways you can structure your new business to save tax then please do contact us for a free initial consultation.