The range of options for structuring your income and taxes has been in the spotlight with HMRC for some years now to limit options and to clamp down on legitimately minimising your overall tax liability.
However this does not mean there is nothing you can do and it is important to understand your options and to plan and control your income and is associated taxes.
Plan Practice can help you to determine the right structure for you to make sure you achieve your long term financial goals whilst maximising your annual income.
A good, comprehensive business tax strategy will include considering such elements as:
- choosing the right business structure
- making the most of the available incentives, allowances and reliefs
- claiming tax deductible expenses
- deciding on the best year end date
- minimising your liability to capital gains tax (CGT)
- taking into account the role of family members
- plans for a tax-efficient exit from your business.
Personal financial strategies
Meanwhile, a robust personal tax strategy will focus on ensuring that your long-term financial goals are met for the rest of your life and for the future of your family and dependents. Our role is to help you make the most of the many allowances available and to suggest strategies that suit your particular circumstances.
An effective personal strategy will include such elements as:
- a tax-efficient remuneration package
- tax-efficient ways to extract profit from your business
- planning to ensure a comfortable retirement
- estate and inheritance tax (IHT) planning
- tax-efficient gifting strategies.
Recently announced measures
The Government has recently announced a number of key measures affecting businesses and individuals, with the stated aim of encouraging savers and supporting business and working families.
Measures for savers
The opportunity to open a Help to Buy ISA closed on 30th November 2019. The current offering is the lifetime ISA. Interest rates are currently very lower offering minimal returns for savers keeping their funds in deposit accounts or fixed rate bonds. Typically this is no more than 2% for a 2-3 year bond.
Annual Investment Allowance (AIA)
|STRUCTURES AND BUILDINGS||2017/18||2018/19||2019/20|
|Structures and buildings allowance: writing down allowance||n/a||2% from 29 October 2018||2%|
|PLANT AND MACHINERY||2017/18||2018/19||2019/20|
|Annual investment allowance (AIA) of 100%||£200,000||£200,000
£1m from 1 January 2019
|Main writing down allowance rate||18%||18%||18%|
|Special rate pool (long life assets and integral features within a building)||8%||8%||6%|
|Energy saving/environmentally beneficial assets||100%||100%||100%|
|Commercial or industrial building in an enterprise zone||100%||100%||100%|
|Research and development||100%||100%||100%|
From April 2016 the Employment Allowance increased by 50%, allowing businesses to save up to £3,000 on their national insurance bill.
|RATES||FINANCIAL YEAR COMMENCING 1 APRIL 2017||FINANCIAL YEAR COMMENCING 1 APRIL 2018||FINANCIAL YEAR COMMENCING 1 APRIL 2019||FINANCIAL YEAR COMMENCING 1 APRIL 2020|
Inheritance tax (IHT) allowance
Changes to the IHT rules include a main residence allowance which started at £100,000 and rising to £175,000 by 2021. This could allow families to pass on up to a total of £1m to their children without paying IHT.
Pensions annual allowance
For those with income (including the value of any pension contributions) above £100,000, the benefits of pensions tax relief is restricted by tapering away their annual allowance. This means income between £100k and £125k are effectively taxed at 60%!
Time to consider how you mitigate this tax burden.
A new National Living Wage
From April 2019 a new National Living Wage (NLW) will be £8.21, it is expected to rise to over £9 by 2020.
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