Tax Tips > Business Tax Planning

  • Capital Gains - Using Home as Office. If you claim tax relief for the use of a room as an office you can avoid any possibility of CGT on a sale of your home if you make sure that the room is not used exclusively for business. A portable TV and your golf clubs stored in the home office should do the trick.
  • Valuing Stock to save tax. If your tax bill for the year is looking decidedly on the high side, take a fresh look at your stock valuation at the end of the year. Stock should have been valued at cost, but can be valued at net realiseable value if this is a lower figure. In simple language this means valued at what you could get for it. Lowering the value of stock will £ for £ reduce taxable profits.
  • Can a company purchase it's own shares, when no-one else want's to buy? This is often the case when a shareholder in a private limited company wants out and there are no willing buyers. There are two main tax options. To have the buyback treated as a Capital Gain, or, to have the payment taxed under Income Tax rules as if the money were received as a dividend. Planning is critical.
  • Transfer your private capital into your business bank account to assist with cash flow, and don't panic when you take the money back. Even though you are withdrawing cash from the business account the transaction has no tax consequences.
  • Self-employed or in partnership? Don't forget that you will pay tax on your profits, not on the money you draw out.
  • Consider a business partnership with your spouse if he or she is an employee in your business, and you are self-employed. If you are a higher rate taxpayer you could save a lot of tax. There should be a good commercial justification for the partnership, and you will need to be wary of the "settlement rules". We would be happy to provide more information.
  • National Minimum Wage - New Rates from 1 October 2011. The main rate for age 21 years and over is £6.08 per hour; 18 to 20 years £4.98 per hour; and for 16 and 17 years £3.68 per hour.
  • Talk to us about the benefits of change of accounting date to the 31 March. If you are self employed and have a year-end other than the 31 March take this advice and you may save a fortune in tax when you retire, or otherwise close the business down. Mention overlap relief!
  • Dispose of your business partners share of partnership assets, if he dies in service, and there is no Capital Gains tax to pay.
  • Expecting a visit from the Inland Revenue, H M Customs and Excise? If possible let your accountant deal with the visit or ask the taxman/VATman to send his queries in writing to your accountant. A misplaced comment may cost you dear!
  • Watch out for the contractor trap. You may consider a freelance worker self-employed but the Inland Revenue may not, and guess who is liable to pay the tax and NIC if the taxman proves to be right. This is the very latest area to go under the Inland Revenue microscope. If you work with self-employed workers check out their status with a specialist advisor. A little attention now, utilising proper contracts, may save you an expensive tax and NIC bill.
  • Consider transferring your trade to a private limited company if you are a higher rate taxpayer, self-employed, and retaining profits in your business. It is possible that you could retain profits at much lower rates, say 20%. Use the tax saved inside the company to invest in property or other assets. Talk to us before taking this step as there are capital gains issues and personal tax matters to consider.
  • Keep all those business receipts. If you want to be sure that an expense is verifiable, keep the receipt/invoice. However getting a receipt from a parking meter when you are visiting a customer can prove difficult. So speak to your accountant at the year-end and make sure he has a list of all those items that are not recorded in your books because you couldn't obtain a formal receipt, i.e. car parking, car washing, laundry and cleaning of overalls and so on. As long as the expense is commercially justifiable there should be no problem incorporating the estimated items.

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