2013 tax year end saving tips for small businesses

Whilst we all look forward to the New Year remember that the tax year has yet to end and so there is still time for some last minute tax planning to save some money before 5th April. If you have not yet reviewed your tax position for 2012/13 and would like help in assessing what your position is and the savings that may be available then please contact Karen Best. In the meantime here are some tips:

  • Married couples/civil partners, ensure your finances are arranged to utilise each personal allowance of £8,105  and to take advantage of the lower rate tax band of £34,370. You may want to consider transferring income producing assets to a spouse to take advantage of their lower taxable income.
  • Capital Gains Tax, If you are selling an asset remember that each person has an exemption of £10,600 so if you are married it may be worth transferring it into joint names before you sell. Also check whether any gains attract Entrepreneurs Relief which could reduce the tax on any chargeable amount to as little as 10%.
  • Extracting profits from the business, If you are a limited company re-visit the salary/dividend split to ensure that you are withdrawing money in the most tax efficient way.
  • Consider pension contributions, Pension contributions made personally can reduce your taxable income and if made by your company are deductible expenses for the company with no immediate tax charge on the individual.
  • Business expenses, don’t forget that you can claim tax relief for items used in the business even if they were bought before you started to trade.
  • Capital allowances, if you bought any plant and machinery items ensure you utilise the Annual Investment Allowance and remember that this has increased from £25,000 to £250,000 from 1 January.
  • Incorporation, If your taxable profits are £300,000 or less you may want to consider whether incorporation for next year with a corporate tax rate of 20% would be beneficial.
  • Relief for Losses, from 6 April 2013 certain types of loss relief that are currently unlimited will be limited to the higher of £50,000 and 25% of your adjusted total income. Therefore ensure that you maximise the reliefs whilst they are still unlimited.
  • Maximise the rules set out under Seed Enterprise Investment scheme (SEIS) to gain access to tax relief of up to 78% of share investment in new companies and also to the generous tax reliefs available under the Enterprise Investment Scheme legislation.
  • Tailor the use of self-employment, limited company, Limited liability partnership and trust planning via pension schemes to create wealth and mitigate risk. An experienced adviser will justify fees and add huge value in this area.
  • Talk to your adviser about your business and its ability to access the generous research and development tax relief.
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