Personal Year End & Forward Planning
The tax year ends on 5th April 2015
- Income tax planning
- Employment planning
- Business planning
- Capital gains tax planning
- Inheritance tax
- Pension planning
- Charitable giving
To discuss the points in this brochure further, please get in touch with us at your local office: www.astonshaw.co.uk/contact-us or alternatively email us at firstname.lastname@example.org
Income Tax and Forward Planning
- Equalise income of married couples/civil partners by switching possession of income-generating assets, potentially reducing your tax liability by up to 60%.
- New ISAs (including Junior ISAs) offer a tax free way to save – consider investing up to your annual maximum individual allowance of £15,000. The £15,000 tax free ISA allowance is available to all members of your family who are of majority age.
- Seed Enterprise Investment Scheme (SEIS) subscribers receive partial exemption of capital gains tax. Also, depending on your tax band you can save up to 86.5% compared to income tax relief which is £5000
- Enterprise Investment Scheme (EIS), Venture Capital Trusts (VCT), and Social Investments provide tax shelters for those who subscribe and, with the exception of VCTs, the opportunity to defer tax and enjoy income tax relief at 30%.
- If you run your own company, dividend planning may be appropriate as this can reduce your exposure to higher rates of income tax.
- Taking tax free alternatives instead of a bonus or salary could be beneficial – such as employer pension contributions, childcare vouchers and other benefits.
- Switching your company car to one with lower emissions could save you income tax.
- If you are receiving car fuel from your company consider if it is actually beneficial, it could work out more cost-effective to claim back your fuel and pay for it yourself.
- Be aware of claiming back mileage and the approved mileage rates available to you. The first 10,000 miles is 45p for cars and vans and 25p thereafter.
- The annual investment allowance was increased from £250 000 to £500 000 until 31st December 2015. Be aware that the timing of your expenditure is crucial.
- Consider if a business asset is likely to be sold within the next two years. If yes, make sure you will qualify for entrepreneurs’ relief to reduce your capital gains tax rate from 28% to 10%.
- Consider the viability of applying for business grants. There are both local and national grants available and depending on the nature of your business can vary in amount.
Capital Gains Tax Planning
- Prior to the disposal of an asset, consider if it is appropriate to transfer the asset in question to your spouse/civil partner in order to take advantage of capital gains tax annual exemption and capital losses to ensure tax efficiency
- Consider selling assets that stand at a loss in order to crystallise that loss for use against current year gains and see if any have become of negligible value on which a loss can be realised.
- If you have more than one residence, make sure you don’t miss the opportunity to minimise capital gains tax by electing within two years of any change.
- People who are not resident in the UK generally do not have to pay capital gains tax. From April 2015 they will be subject to capital gains tax on the sale of any UK residential property, so those affected should consider a sale before then.
- Partial exemption year end adjustments should be completed each year by the end of March, April or May depending on when your VAT return falls due.
- Motor Fuel scale charges will change following the budget announcements in March. The new scale charges must be applied from the beginning of the VAT period commencing after 1st April.
- The VAT registration threshold normally increases from the date of the budget, usually by the rate of inflation. The de-registration threshold will increase at the same time.
- For traders using the annual accounting scheme for VAT the annual adjustment is usually due at the end of the accounting year.
- Don’t miss opportunities to use the annual exempt amount of £3,000, the small gifts exemption of £250 per recipient and making regular gifts out of income.
- Ensure any death benefits from personal pension plans and life assurance policies are written in trust, so any proceeds are outside your estate.
- Consider lifetime gifts so the seven-year clock starts to run, to mitigate inheritance tax on death.
- Review wills and estate planning arrangements.
- Making pension contributions can reduce your exposure to higher tax rate.
- The annual allowance for contributions is £40,000 from April 2014. Unused allowances can be carried forward for three years, meaning anything unused from 2011-12 will be lost after 5th April 2015.
- Consider a stakeholder pension scheme for non-earning spouses/civil partners, children and grandchildren. The maximum net payment is £2,880, which HMRC gross up to £3,600.
- Major reforms to pensions were announced in Budget 2014, with some changes having immediate effect and other changes will come into force in April 2015. If you are aged 55 or over, you may be able to start drawing down from your pension pot now, and with increased flexibility from April 2015. This will enable some to mitigate income tax by taking advantage of unused basic-rate bands, business loses and other reliefs.
- Making Gift Aid payments can reduce your exposure to higher rate tax.
- Gifts to charities based in European Economic area countries qualify for Gift Aid relief.
- Ensure donations are made by the spouse/civil partner who pays tax at the highest rate.
- Gifts can be made from assets other than cash, such as company shares.