There are lots of decisions to be made when you are the director of your own limited company. From how best to plan for your future through to whether you are maximising the tax efficiencies and opportunities available. This article provides some hints, tips and reminders on what you should be considering in the run up to the end of the current tax year.
- Ensure all eligible business expenses are recorded on the company's business records before the end of the tax year.
- Make sure you use your £5000 Nil Rate Dividend Allowance.
- If you are expecting your company to earn fewer profits in the 2018/19 tax year consider deferring the declaration and distribution of dividends from 2017/18 until next year.
- If you have a company pension scheme, subject to certain income restrictions (mentioned in the Pensions section in this issue of Tax Times) your company can invest up to £40,000 for the tax year ended 5 April 2018.
- Talk to your PayStream Accounts Team if you are considering bringing a second shareholder into your company
Hints & Tips
- Don't forget to make use of your spouse's Savings Nil Rate Band. You could do this by electing to transfer savings held in your own name to your spouse.
- For high earning individuals, a portion of salary can be sacrificed for pension contributions, childcare, low emission cars and health-related benefits (such as cycling to work), though other benefits were removed from salary sacrifice arrangements from 6 April 2017. This will save National Insurance Contributions (NICs). It could also save income tax where the sacrifice brings the income to below £100,000.
- Where an asset has become of negligible value, consider making a claim for the capital loss.
- Individuals with income around or just above the £100K mark should consider making a pension contributions to regain all or part of their personal allowance.
- If your income is over £60,000 you may want to consider disclaiming Child Benefit to avoid a claw back tax charge. However, if the claimant of child benefit is not themselves working, then disclaiming it will mean the year does not qualify for State Pension purposes. In this scenario you should just ask for payment to be stopped rather than disclaiming it altogether.
- Where you are employed, or have a pension, it is worth checking your PAYE Notice of Coding to ensure your allowances are correctly stated. This includes relief for pension contributions, charitable donations and any other tax reliefs. HMRC's coding system has, in our experience, led to many incorrect coding notices. If the coding is wrong, a taxpayer could end up with an unwanted, and unexpected, tax bill after the end of the tax year.
- If you are UK resident and have any offshore assets or income, you need to let us know. HMRC is now receiving information from over 90 countries on international investments and financial structures held offshore by UK tax residents. There will be penalties for not declaring such overseas interests.