The tax year end is rapidly approaching so it’s a good time to check your finances and make sure you have minimised any tax liabilities. What should you be looking at?
Here are 5 things that may apply to you to help you save some tax before 5 April.
If you run your business through a limited company, then you can extract funds via dividends, as long as the business has the reserves to be able to do so. The dividend allowance for 18/19 is £2,000, so you will be able to extract this amount tax-free per shareholder.
Timing of Expenses
If your company or business year end is 31 March 19, then think about expenditure around the year end. Money spent before 31 March 19 will be included in this year’s accounts, and reduce your profit this year, whereas delaying until April 19 will move those costs into next year (generally). If your business is on the cusp of paying higher rate tax, then bringing forward planned expenditure could be tax efficient.
Pensions remain one of the most tax eﬃcient ways to save. You receive a 20% top-up from the government on any contributions you make personally and you also extend your basic rate band for income tax purposes. Depending on your income, this can reduce the amount of tax you pay at higher rates.
Paying a pension contribution from your limited company is also tax efficient and is an allowable deduction for corporation tax. Speak to an IFA if you are interested in contributing to your later years!
If you or your partner’s adjusted taxable income is above £50,000 then you start to lose your child benefit for the year. This is reduced on a sliding scale up to £60,000 when it is lost in full, and if you have received it in the year it will need to be repaid. Consider making pension contributions, or gift aid donations to reduce your adjusted taxable income, and to keep your child benefit.
So many people who are entitled to this are still not claiming it!
The Marriage allowance lets you transfer 10% of your personal allowance to your spouse/civil partner if you have not used it. This can save you £237 as a couple. To qualify your spouse must be a basic rate taxpayer, and your income under £11,850.
For any more information, please contact Rosie Forsyth atWilkins & Co