Saving Tax - are you paying too much tax?

With a self employed person's blood, sweat and tears spent in earning an honest pound, the last thing you need is for it being taken incorrectly or unfairly away from you.

We offer all our clients expert tax planning advice and tax reviews to ensure that they only pay as much as they are legally obliged to and nothing more.

Making full use of all allowances

With our expert knowledge of Tax Legislation we know that different allowances and reliefs are available for minimising tax liabilities arising on earnings, profits and chargeable gains. And have many times seen public pay far too much in tax or not take advantage of allowances they are legally allowed to.

For an average person understanding allowance entitlements and regarding them can be a difficult task, especially as they can change every year with the budget. And HMRC's helplines don't help explain how to pay less tax.

With our experience of complex tax issues and knowledge of complicated tax legislation we regularly guide our clients through the tax maze. So are please to list some tax planning tips below:

Tax Saving Tips

  1. Maximising your tax allowances: Each person has an annual capital gains tax allowance that can be reached before the gain is taxed. This figure amounts to £10,900 for the financial tax year 2013/2014. With sound financial planning, you can get up to £20,340 tax free each year (£9,440 for personal allowance and £10,900 for Capital Gains Tax). If you are self employed, your family members may be able to help you out by being employed by your business. Your spouse and or children are legally allowed to be paid a salary from the business in exchange for doing various admin tasks. However, a number of rules need to be followed regarding the spouse’s salary and having evidence that the payments were made during the year. E.g. A self employed sole trader on the higher rate tax liability can benefit significantly from employing his wife to help with his office adminstration work by utilising her personal tax free allowance as well as his own.
  2. Capital Gains: If you are using your personal room as an office in order to claim tax relief, there may be a tax charge later when you sell your house. However we can provide measures for mitigating the capital gains tax liability if incurred.
  3. Interest loans: It is also possible to lend an employee up to £5,000 without incurring any tax provided that he or she is not a director of the company. This can be very useful if the employer needs to reduce its tax liability for a given year and the employee needs a helping hand financially.
  4. VAT profit: VAT paid before VAT registration may be recovered for up to 6 months prior by including the input VAT on your first return. Make sure you have a record of all the VAT invoices and adjustments made. Further savings and even profit can be made if you are accepted on to a HMRC approved VAT scheme E.g. you may benefit from charging 20% VAT but paying 14.5% to HMRC. We are experts in applying for such schemes with HMRC and can ensure your business fulfills the requirements and crucially will benefit from such an arrangement over all.
  5. Plant and Machinery to Garden Shed's: If you want to reduce the capital gains tax on a property or business that you are selling? The garden shed palnt and machinery etc and other fixtures and fittings are treated as 'wasting assets' ie chattels which will devalue over 50 year period are exempt from Capital Gains Tax, i.e when you sell them there is no tax to pay. We can also help advice you regarding saving Stamp Duty fees when dealing with  property issues as well. 
  6. Value Your Stock A Different Way: You should re-assess your stock valuation if your tax liability is high. Inventory should be valued at the lower of cost and net realisable value. Reducing the value of closing inventory will reduce taxable profits and hence reduce the tax liability. 
  7. Taking advantage of tax free opportunities: Use up your and your partner’s cash ISA limit of £5,760. Gift any surplus funds to your partner if he/she is a lower tax payer than you. But be careful of the liquidity position of the business, it may be troubling to recall back the funds.

How we can help

Finding a tax saving paln that fits is like tailoring a suit, it requires adjustment and trimming, so get in touch today for more specific tax planning advice for you and your business needs. The tax tips above are just a very small sample of the many different types of tax planning solutions on offer.

We have additional tax tips listed in our news section. Call 0800 043 4051 or via our contact us page.