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Year-end tax planning tips for business owners

January 11, 2013

Whether you are a business person, property landlord or pay significant amounts of tax as an employed or retired person, there is now a short window of opportunity to examine your likely earnings for the 2012-13 tax year, and more importantly, see what can be done to minimise those liabilities.

These tax planning tips were kindly provided by HfM Accountants

Although we are now at the beginning of a new calendar year, we are in the last quarter of the current tax year.

It is impossible to outline all of the possible tax planning issues that could be of benefit. We have listed below a few and suggest you call your accountant to discuss your individual circumstances.

  • Have you maximised your ISA investments this year?
  • Have you maximised your pension contributions?
  • If possible have you utilised your Capital Gains Tax personal exemption? Currently £10,600 2012-13.
  • If your employer still pays for the private fuel used in your company car, you can effectively avoid the car fuel benefit charge if you repay your employer for the private fuel before the end of the tax year. It may be worth crunching the numbers as the tax benefit in kind is expensive and the private fuel refund may be less.
  • For Inheritance Tax purposes each person can give £250 a year to any number of recipients, as well as £3,000 annually over and above that amount. They can also make regular gifts out of their income (not capital) that should fall to be exempt.
  • If you are married or in a Civil Partnership and one partner/spouse has a much lower level of earned income, consider transferring income producing assets to the lower income earner. With Income Tax rates at a maximum 50% this current tax year, savings could be significant.
  • If you are in business would it be prudent to bring forward capital expenditure so that you can take advantage of the increase in the Annual Investment Allowance from 1 January 2013.
  • If your income is likely to exceed £100,000 this tax year, have you considered the potential reduction or loss of your personal tax allowance?
  • If you are a high income earner paying tax at the 50% additional rate, could you defer taking bonuses or dividends until after 5 April 2013 when the additional rate reduces to 45%?
  • Is it likely you will have business tax losses for 2012-13?

As indicated above, every person’s circumstances are different and the above list is by no means exhaustive.