Tax Planning with Cheylesmore Accountants
Ever had the anxiety of not knowing what the tax bill will be as the payment date approaches? Being made to constantly wait till deadline dates to be informed of how much to pay? Had unexpected tax liabilities sprung up? Why not give Cheylesmore Accountants a ring today to understand how our partners and advisors can optimise your tax affairs through the various reliefs and allowances available.
Marriage Allowance
For instance, if you and your partner are basic-rate tax payers with one of you earning under £12,570, it could be possible to claim the Marriage Allowance which would reduce the tax liability of the higher earning partner by up to £252. This would work by reducing the personal allowance of the partner making the transfer by £1260 whilst increasing the allowance of the claimant by £1260. Given that both need to be basic-rate partners, the maximum tax saving achieved would be £252 [20% x £1260].
Payroll
If you’re a director and/or shareholder of a limited company, you would be in a position to influence your company’s financial affairs. This could include the possibility of putting yourself on payroll at a tax-efficient salary to reduce Corporation Tax. Be wary though of the inability to claim the Employment Allowance if payroll consists of simply a solitary director since this would prevent the company from claiming Employment Allowance. Whilst any subsequent Employer National Insurance payable would be claimable as an allowable expense for Corporation Tax, it would pose a problem from a cash flow perspective. To get around this, consider whether there’s anyone who can help out with any administrative or other aspects of the company who you could add onto payroll. This could be another director in some instances.
Capital Allowances and R&D Tax Credits
Approaching the end of your company’s financial year and anticipating a large Corporation Tax liability? Assess whether there are any possibilities to invest in long-term assets qualifying for the Annual Investment Allowance which includes most items of plant and machinery with the exception of cars. Note though that purchases of electric and zero-emission vehicles do qualify for the First Year Allowance enabling the company to write off 100% of the cost in the year of acquisition. If your company engages in any research and development activities, it might also be worth claiming R&D tax credits either via the SME regime or through the Research & Development Expenditure Credit (RDEC) if your company is classed as large.
Rental and Trading Income
Individuals renting out property with less than £1000 worth of rent or expenses in a year could claim the property allowance to either avoid having to pay tax on rent if it’s less than £1000 whereas the tax liability could be reduced by claiming the flat £1000 against rental income rather than actual expenses. A trading allowance worth £1000 works in a similar fashion whereby individuals with trading income under £1000 need not file pay any tax towards the same if they claim for the same or where income exceeds £1000 but expenses don’t, the tax liability could be minimized by making this claim. Are you renting out a room of in a residential property which you own? Are you aware of the rent-a-room relief which would enable you to earn up to £7500 per year tax-free?
For more information on such tax reliefs and allowances, check out our website to identify the range of accounting services which Cheylesmore Accountants offers. Whether your just looking to comply with the basic legal requirements or seeking a more comprehensive package of compliance and advisory, there’s something for everyone. Give us a ring today to get your tax affairs in shape and never having to worry about the numbers again.
