- Married couples – consider transferring assets between spouses, to ensure income is taxed at the lowest marginal rate,
- Let properties – if you let property in need of re-decoration, repair, etc, consider bringing forward expenditure to accelerate tax relief,
- Family businesses – consider employment of spouse or increasing the employed spouse’s earnings, to reduce tax on profits and build up entitlement to state benefits. Ensure that this is commercially justifiable and within the national minimum wage legislation,
- Consider investing in an EIS or VCT company, to obtain income tax relief on entry,
- Incorporation of sole trades and partnerships – this is a complex area, but the potential tax savings are large,
- Family companies – consider payment of a dividend as an alternative to salary, to reduce both tax and National Insurance contributions. Beware the IR35 rules for personal service companies,
- Sole traders to ensure relief for capital expenditure and losses is maximised,
- Consider charitable gifts under the Gift Aid Scheme,
- Consider use of Trusts for the benefit of grandchildren or other members of the family,
- Capital losses – Losses on the sale of certain shares or on the failure of an investment can be set against income. Make sure the appropriate claim is made.
Capital Gains Tax
- Married couples – consider transfer of assets between spouses to help use of both spouses’ annual exemptions (and minimise tax rates),
- Consider scope to create losses on assets which have fallen in value (including negligible value claims) to help reduce tax on gains realised on the disposal of other assets,
- Review business assets and shares to ensure entitlement to the CGT entrepreneurs relief is maximised,
- Consider donating certain assets to charity and get exemption from CGT and income tax relief,
- Watch the deferral relief time limits for Enterprise Investment Scheme and Venture Capital Trust investments (see below),
- Share options – do you have a capital loss that could be crystallised, following Mansworth v Jelley.
- Company cars – consider repaying employer for private fuel, if lower than tax cost of benefit in kind,
- Consider contributions to employee personal pensions, avoiding both income tax and national insurance contributions,
- Review obligation to have a stakeholder pension scheme,
- Consider paying bonuses before 6th April, to avoid possible national insurance increases,
- Consider other means of making tax relievable payments as an alternative to salary or bonus e.g. rent or interest on loans, and avoid National Insurance Contributions.
Savings and Investments
- Individual Savings Accounts -maximum £15,240. No tax on income or capital gains,
- Pensions, including stakeholder – pay contributions for this tax year by 5th April. Consider for low or non taxpayers including children, as 20% tax relief is given at source on payments up to £3,600 per year, regardless of earnings. Full relief for higher rate taxpayers.
- Enterprise Investment Scheme (EIS) – maximum £200,000 investment per year into unquoted trading company offers 20% income tax relief, exemption from CGT on gains and the ability to defer CGT on gains already made (or to be made), subject to various time limits and other conditions,
- Venture capital trusts – similar to EIS except this is a collective investment into a company quoted on the Stock Exchange. Maximum investment £200,000 per year,
- Always seek independent financial advice Whiting & Partners Wealth Management Ltd can help.
- Review your Will to ensure it reflects your current wishes and intentions and is tax efficient,
- Ensure life insurance policies are written in trust and so held outside your Estate,
- Consider lifetime gifts, which will escape tax altogether after seven years, regardless of the amount gifted,
- Consider gifts in a Discretionary Trust, which will enable you to reduce tax while retaining control of assets, while beneficiaries, e.g. grandchildren, are young,
- Use IHT exemptions – £250 small gifts exemption, £3,000 annual exemption, marriage gift exemption, “normal expenditure out of income” exemption,
- Review farming and business assets, to ensure available generous reliefs are secured,
- Plan the succession for your business, to minimise tax.