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The 12 Tax Tips of Christmas

November 2015

1. Complete your Tax Return

Christmas is the time to get your tax return done so your accountant has a fighting chance of getting it to HMRC within the deadline.

2. Tax Deductible Christmas Party

You really enjoyed the annual staff party and seeing your staff enjoying the festive spirit.  It is good to know that HMRC allow relief for the cost of up to £150 per head, though your accountant advised you not to exceed this amount or the whole would be taxable.

3. Review your Business – 

Look at how your business has progressed throughout the preceding year and look to potential changes in structure. There may be the acquisition of Plant and Machinery to consider or Research and Development – both of these attract very generous tax reliefs.

4. Reassess your Salary

If you are in a position to look ahead to your future earnings, Christmas and the period immediately thereafter is a time to consider remuneration planning, particularly in the light of recent changes to the taxation of dividends.

5. Plan your Retirement

You put your feet up and enjoyed relaxing in front of the fire without the pressures of work and wonder if it might be the time to step down from your business. Planning your retirement and the tax consequences thereof is vital and with a potential of Capital Gains Tax at 10% through Entrepreneur’s relief it might be worth exploring.

6. Company Pay-Out

Consider if the Company could make you a tax free termination payment if you retired. That’s certainly something to think about but it’s important to seek expert advice as it’s a complex tax issue.

7. Tax free gifting

You enjoyed the smiles of your staff as you gave each of them a bottle of wine or a box of chocolates, a small gift (less than £50 per head) is tax free if given to employees.

8. Spread the workload

Ask your accountant about the Employee Management Incentive, whereby the senior employees in your business are incentivised to take on the responsibility of management decisions.

9. Plan ahead for your retirement

Would you have enough to live on, would your pension be big enough, could you top up your contributions to boost this and get tax relief?  Your accountant can advise you on all aspects of retirement planning.

10. Get on the property ladder

Help to Buy ISA comes out this December, which is great news for first time buyers. Help to Buy ISAs are a no-brainer if you’re saving for a deposit for an eligible home. It’s a tax-free savings product in which the Government adds 25% on top of whatever you’ve saved.

11. Give your kids £3000

The kids could do with a spot of cash and you’re pretty certain that you could help them out a bit. How much can you give them and get an annual exemption for Inheritance tax? It’s £3,000 for each of you and your spouse, again this is something you need to talk to your accountant about.

12. Move some of your income to your children

It may depend upon circumstances but if the children are over 18 it might be possible to give them shares in the Company (Alphabet) and pay them dividends to help pay for further education, shifting the burden from you as a parent out of your income to them as income.

To discuss any of these points, do not hesitate to contact us.

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