One Of The Secrets of Good Accounting Is Timing!
Welcome to the first Charterhouse Newsletter of 2017. In this issue we take a look at tax planning and how you can reduce your tax obligations from a personal and business perspective.
After the festivities of the Christmas period and the advent of the New Year, we will all be back to reality and pushing on with New Year’s resolutions (maybe). As well as entering a new calendar year, a new Fiscal Year is also upon us. For those of you wishing to get your financial affairs up to date and to undertake any tax planning to mitigate your liabilities for the current tax year, please read on.
With tax planning never far from the forefront of the public eye, it is often easy to get caught up in what others are doing without considering one's own position. Whilst those stories that make it to the public domain are at the extreme and aggressive end of the spectrum, there are of course a number of far simpler and less provocative steps that can be taken to mitigate ones tax liabilities.
Are any of the following relevant to your circumstances?
As the world of taxation is ever growing, there are a number of areas you should be considering.The areas that are most relevant to the vast majority are:
Tax Planning For Individuals
Can anything be done to reduce your income tax liabilities for the current year?
- Are any investments being contemplated? If so, there are a number of investments that carry significant tax breaks, such as EIS or VCT investments. The timing of these will be crucial should you wish to maximise the relief available.
- Planning for retirement is always important so consideration should be given as to whether there is scope to make additional pension contributions and, if so, whether this will be beneficial.
- Consideration should be given to whether the most has been made of ISA allowances for the current year
- In respect of Capital Gains Tax, have there been any gains made in the last three years?
- Are any gains likely to crystallise in the future? Can anything be done now to mitigate a potential future charge to Capital Gains Tax?
- Is Inheritance Tax something that is becoming a concern? If so, has use been made of the annual exemptions for transferring assets down the generations? Has a full and thorough review of your estate been carried out? Is your Will up to date and does it allow your estate to be transferred to those you wish to benefit as efficiently as possible?
- Can any planning be done now to mitigate against future estate duties for your next of kin?
Tax Planning For Businesses
- Can anything be done in respect of the level of profits of the business to mitigate exposure to tax?
- Is any Capital Expenditure planned for the business either now or in the near future? If so has consideration been given to the timing of the expenditure to maximise the benefit of the annual investment allowance?
- Where you operate through a limited company, has profit extraction been considered, particularly as this will tie in closely with the individual owners personal tax position?
Whilst this is just a flavour of the types of things for consideration, it is by no means an exhaustive list.
At Charterhouse, we believe each situation will be unique and therefore should be dealt with as such. It is worth noting that although we are advocating a financial review before the end of the tax year, there is always merit in keeping your tax affairs under regular review to ensure you are in the best possible position.
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