Planning for a year's prosperity

Use your personal tax reliefs

Capital and the related income can normally be transferred between husband and wife or civil partners without any tax liabilities. Such transfers must be outright gifts and can be made free of both capital gains tax and inheritance tax
Consider paying your husband/wife/children a salary for working in your business
Consider taking your husband/wife into partnership
Consider one-off or recurring donations to charity

Benefits in kind

Keep records of business trips showing the date, mileage, and purpose of trip to satisfy HM Revenue & Customs queries
Consider reimbursing your employer for the full cost of private petrol to prevent the car fuel charge applying
Remember that no tax is charged on beneficial loans totaling less than £5,000 per employee

Check that your pension arrangements are adequate, especially if you are self employed or not in a company scheme
Take advantage of the maximum allowable contributions which are fixed at the level of earnings in the tax year (or £3,600 if greater)
Employees in a company scheme may consider paying additional voluntary contributions to help boost their final pension or may consider contributing to a registered pension scheme

This year you are entitled to £10,600 (£10,600 2011/12) of net gains free of tax. Plan disposals to make use of this exemption
Consider deferring disposals until after 5 April to delay capital gains tax payment by a full year and maximise taper relief
If you intend to retire from business in the next few years, plan ahead to minimise tax on disposal of your business or family company
If you have more than one home, consider making or revising an election to determine which one will qualify for the CGT exemption
Claim losses on assets that have become worthless
Consider EIS deferral relief, which allows you to defer gains on disposal of any chargeable asset against investment in new ordinary shares in a qualifying unquoted trading company.

Review your estate planning strategy
Review your Will
Consider lifetime gifts to individuals or trusts (gifts to spouses are exempt)
Maximise business property relief and agricultural property relief
Life assurance policies can be used as a way of making gifts to beneficiaries, and also to build up sufficient money to pay any IHT that may eventually become due
The annual £3,000 exemption applies to both husband and wife or civil partners and can be carried forward for one year, but then used only if the exemption for the later year is utilised
Other reliefs are: £250 small gift exemption, marriage gifts exemption, and gifts for charities, national purposes, public benefit, and political parties

This planning centres on the accounting year end rather than the tax year end:

Defer income/advance expenditure
Companies may defer sales of chargeable assets until after the year end, thereby deferring capital gains
Sole traders and partnerships may consider advancing the sale of chargeable assets if current year capital gains annual exemptions have not been used
If your business is seasonal, consider changing your accounting date. The tax rules associated with such a change are complex and great care on the selection of an alternative accounting date is required
Accelerate bonuses to staff and directors
Make extra employers' contributions to pension schemes
If you are thinking of embarking on a new business venture, bring forward the commencement date to offset any initial losses against current year's business profits
Gains made on the sale of business assets may be rolled over on certain classes of business asset against purchases of replacement assets. Consider whether you need to bring forward the purchase of a replacement asset to enable this relief to be used

For company profits of up to £300,000, it is normally more economical to pay a dividend than a bonus
Consider the timing of dividends and bonuses with regard to the personal tax position of company shareholders

Do call us if you would like help with your tax planning.

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