There are various allowances and reliefs available which can help minimise tax liabilities arising on earnings, profits of trade or gains when you sell chargeable assets, but understanding what they are and which ones you are entitled to can be a daunting.
Although HM Revenue & Customs have helplines available to assist taxpayers, staff members are not tasked with providing advice on how to organise your affairs in order to minimise the amount of tax you pay. If you are looking to make tax savings but do not want to attempt to interpret detailed tax legislation, you should seek professional advice. We offer all clients tax planning reviews and try to ensure that our clients only pay as much tax as they are legally obliged to and no more!
Whatever your tax planning needs we will endeavour to find a tax saving scheme to suit your circumstances so make sure you contact us, especially as there may be more specific tax planning tips and tax advice available for your business sector.
We have included a series of tax tips below which provide general guidance on various tax saving strategies and should answer some of your tax questions.
Employing your spouse in the business
If you are self-employed and your spouse helps out with general administration, or any other role, it is quite legitimate to pay your spouse a salary. However, there are a few rules that need to be followed, such as how much to pay your spouse and have evidence that the payments were made during the year. Sole traders with higher rate tax liabilities will benefit significantly from this arrangement and further tax savings could be made by setting up an employer pension scheme.
Are you selling that second or third home and want to reduce any capital gains tax that you may need to pay? The garden shed and other fixtures and fittings are treated as wasting chattels for Capital Gains Tax, i.e. when you sell them there is no tax to pay. Why not ask your solicitor to allocate part of the selling price in the contract to these items? Make sure you seek advice regarding Stamp Duty Land Tax when considering these issues.
Low interest loans provided by employers
It may be possible for a company to lend an employee up to £5,000 with no tax implications for them, provided they are not a director. This can be useful if say the employee needs to buy his company car to avoid benefit in kind tax charges.
Capital Gains – Using Home as Office
If you claim tax relief for the use of a room as an office there can be a tax charge when you later sell your home, however we can advise you of measures that can be taken to help to minimise or mitigate a capital gains tax liability.
Stock should be valued at cost, but can be valued at ‘net realisable value’ if this is a lower figure. Essentially this means valued at what you could sell the stock in an open market sale. Lowering the value of closing stock will reduce taxable profits.
Recover VAT on invoices that you have paid or received before you registered for VAT by including the input VAT on your first return. Make sure you have the VAT invoices and keep a schedule of the adjustments you have made. Be careful though, there are time limits and rules for this recovery measure so be sure to speak with your accountant!