TAX SAVINGS - are you paying too much tax?
We recommend that our clients pay as much tax as they are legally obliged to pay, and no more!
The tax legislation contains many allowances and reliefs that will help you to minimise your tax liabilities. This is so whether the tax arises on earnings, profits of trade or gains when you sell chargeable assets.
Inland Revenue (HMRC) staff are not able to advise you on how to organise your affairs to minimise the amount of tax you pay. If you are looking to make tax savings and do not want to make a detailed study of tax legislation, you should seek professional advice. (For business clients our fees are tax deductible!)
We have included a series of tax tips in this web page which provide general commentary on various tax saving strategies and should answer some of your tax questions.
- Employing spouse in your 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. Just follow sensible commercial rules and you will have no problem with the Inland Revenue. In particular pay a market rate for the type of work done, and number of hours worked. Sole traders with higher rate tax liabilities will benefit significantly from this arrangement.
- What about the Garden Shed? 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 - providing you are not a director, it may be possible for a company to lend an employee up to £5,000 with no tax complications. This can be a useful if say the employee needs to buy out 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 you can avoid any possibility of CGT on a sale of your home if you make sure that the room is not used exclusively for business. A portable TV and your golf clubs stored in the home office could be sufficient.
- Valuing Stock to save tax - if your tax bill for the year is looking decidedly on the high side, take a fresh look at your stock valuation at the end of the year. Stock should have been valued at cost, but can be valued at net realiseable value if this is a lower figure. In simple language this means valued at what you could sell the stock in an open market sale. Lowering the value of closing stock will £ for £ reduce taxable profits.
- Recover VAT on invoices that you have paid or received before you register for VAT by including the input VAT on your first return. Make sure you have the VAT invoice and keep a schedule of the adjustments you have made.
How we can help.
The tax tips set out above cover just a few of the strategic tax planning solutions that we can offer. We have more tax tips listed in our news section.
If you would like to discuss any of the issues raised, do get in touch by calling 0800 0523 555. Whatever your tax planning needs we will endeavour to find a tax saving scheme to suit your circumstances - make sure you contact us as more specific tax planning tips and tax advice may be available for your business sector.
Printable 'Tax Savings' Page
