This month, Jack Posner (principal) and Darren Stone (manager) of Leon and Company Chartered Accountants in Leeds write about the upcoming tax year-end and how you can plan for it.
The tax year-end is almost upon us and it won’t be long until we start requesting that our clients, once again, start getting their business records together. However, before we reach that all important year-end of 5th April, we thought we’d share with you three tax-planning tips to help you on your way:
If you are in business and you have an approaching year-end (many businesses also use 5th April!), then now is an excellent time to review your spend. All businesses enjoy an Annual Investment Allowance of up to £500,000 per year, which means if your business is likely to make a profit and pay tax, then your capital equipment purchases are well covered by the allowance. So it may make good sense to buy that much-needed computer or machine before the end of the tax year, thus reducing your tax liability sooner rather than later.
For those of you that trade using a limited company, but have a year-end after 5th April, you may wish to review your company’s profits to see whether you can vote an interim dividend. This is particularly useful if you have unused personal allowances at 5th April 2015, or are a basic-rate taxpayer, as you can vote part of an annual dividend before the year-end, and benefit from your spare allowances to cover the tax. Of course, this is all rather involved tax planning, but can be extremely effective. I would always suggest you have a conversation with your accountant before making any decisions.
Giving to charity
For higher rate taxpayers, a well-timed charitable donation made under gift-aid can result in significant benefits for both the donor and also the charity. Such gifts made before 5th April will attract a nice tax break in the current year, and not to forget, it also makes you feel rather good too!