Tom Prince

Spotless Window Cleaning

Phil Coles

MD - SJS Mobile Mechanical Services Ltd.

Linda Lowery

Rapture Design

Mark Dorkin

Director – MJD Interiors Ltd

Paul Beesley

MD - F & FJ Beesley ltd

Richard Apps

Harvard Management Consultants

Capital allowances
• New expenditure of up to £100,000 on equipment and machinery for your business will attract a capital allowances of 100%.
• Expenditure on low emissions vehicles can also attract capital allowances of up to 100%.
Make purchases before 5 April 2011 to claim tax relief in this year.

Wages paid to family members
If you have family members on the payroll ensure that you physically make payment to them before 5 April 2011, into their own private bank account if possible. Otherwise, HM Revenue& Customs could try to disallow a tax deduction in your accounts.

Goods for own consumption
If you have taken, or are thinking about taking, goods out of business stock for your own use or consumption you can face an unexpected tax charge. It might be better to ensure that the cost of goods purchased for you are debited to drawings and not included as trading stock and adjusted out for tax.

Motoring and mileage records
Unless you are claiming mileage allowances, you need to ensure that you have kept a journey log for part of the year so that you can estimate what proportion of your expenses relate to business use. It is not too late to start a mileage log for past year, providing that your journeys for the rest of the month are representative of your typical travel pattern.

Books and records
Ensure that you have retained or downloaded copies of internet bank statements for the year. If you have any missing your bank may charge you extra for duplicates.

Pensions
Pension contributions can reduce higher rate tax and new rules mean that you may have unused annual allowances to bring forward to 2011/12

2011/12 changes to tax rates & allowances
• Changes to personal tax allowances and tax rates for income tax in 2011/12 will potentially see more taxpayers paying tax at the higher rates of 40% or 50%.
• In 2011/12 all earners and employers will see National Insurance increase by 1%.

Income splitting
Have directors with spouses (or civil partners) used up their personal allowances, basic rate bands and optimised their tax allowances this year?
• Do they need to consider a re-division of income producing assets before the start of the new tax year?
• Should the company issue different classes of share to ensure that dividends can be voted to different shareholders on a flexible basis?
• Do they need to execute any dividend waivers ahead of 2011/12

Marginal tax rates
Where it looks as if a director will lose his personal allowances in a year (where income is in excess of £100,000) or start paying tax at 50% he can consider these options for reducing tax:

Loans to directors - take a loan instead of a salary in March
• Providing that the outstanding balance is not in excess of £5,000 there will be no taxable benefit when the company lends the director cash.
• The amount should be agreed in a board meeting.
• Repay the loan within nine months of the company’s year-end to ensure that the company does not incur an additional tax charge.

Pension contributions
Ensure that pension contributions are calculated correctly:
• The Special Annual Allowance anti-forestalling measures affect irregular contributions made by higher earners 2010/11.
• Changes to pensions Annual Allowances ahead of the 2011/12 tax year, place restrictions on the amount of contributions that can made after 14 October 2010. These potentially affect anyone who is considering making a contribution in excess of £50,000.

Review tax compliance -Unlawful dividends
HM Revenue & Customs are reviewing dividends to ensure that they are voted correctly. If a dividend is paid out illegally, HMRC will generally assess the company to PAYE and NICs on the basis that it is a cash advance of earnings.
Check that the dividends are properly voted and constituted, with accounts in place in order to confirm that dividends are not paid out illegally.
• The tax consequences of an unlawful dividend depend on the company’s status and whether an unlawful dividend is repaid by the shareholder.
• This looks as if it will provide a rich source of pickings for HMRC: proprietors keep an eye on your drawings.

Employee benefit trusts (EBTs)
If a director or his family has received any benefits from an EBT these should be reviewed in the light of new measures introduced in November 2010.

Salary bonuses
Watch the timing of bonuses.
• Consider tax position if a bonus is due for payment (or credited to a loan account) before 5 April 2011.
• If the bonus is to be deferred and paid in 2011/12 consider the added cost of NICs.

Savings, investments and gift-aid
• Consider investing in ISAs, or topping up ISA investments up to annual limits, in order to avoid any future higher rate tax on savings income.
• There is still time to invest in Enterprise Investment Scheme (EIS) companies in order to secure 20% income tax relief.
• Donations under gift-aid will attract tax relief.

The Plumbers Tax Safe Plan (PTSP) provides tax-payers with the opportunity to bring any gaps in their affairs up to date by making a full disclosure and then settlement with HMRC. Under the terms of the offer, tax penalties are capped and although interest is charged on any tax paid late.

HMRC originally targeted plumbers because it holds information on the names of registered plumbers and heating engineers and so it can reconcile this to check whether individuals are registered for Self-Assessment. This tax amnesty is open to everyone though, and so this is a very good opportunity to make a disclosure which will then ensure that HMRC cannot go back and re-open previous years for reassessment.

Those individuals who have under-declared offshore income or capital gains arising from offshore assets may still be able to take advantage of HMRC’s other tax amnesty. The Liechtenstein disclosure opportunity runs until 2015.

For further details, please call…

Have you done any pre year-end tax planning?

We are fast approaching the end of the tax year and every business owner should think about some tax planning before 5 April. If you would like to know what you can do to reduce your tax burden contact us taxsorted(at)googlemail.com