Top 10 Year End Tax Planning Tips – it’s not too late!


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The end of the tax year is fast approaching but a window of opportunity remains for families and business owners to make best use of their 2013/14 tax allowances and get themselves in the best possible shape the 2014/15 tax year.

  1. For businesses looking at capital expenditure, the Annual Investment Allowance was increased temporarily to £250,000 for two years from 1 January 2013. This means that 100% capital allowances are potentially available on capital expenditure incurred in this period.  This may not be extended beyond 1 January 2015. Those planning on purchasing new equipment in the next two years should consider bringing forward some purchases to the current tax year to ensure that you maximise your ability to obtain relief on your expenditure.
  2. Repairs are an ongoing cost for any business and these costs can be set against income in calculating taxable profits.  Business owners may wish to consider bringing forward repairs to reduce their 2013/14 taxable income. Expenditure on repairs incurred on 5 April (in the 2013/14 tax year) will get relief 12 months earlier than expenditure on 6 April (in the 2014/15 tax year).
  3. Business owners who make up accounts to 31 March will now have a clearer picture of their trading position for the year. If the taxable profits are likely to be less than in the 2012/13 tax year, it may be possible to reduce the payments on account for the 2013/14 tax year and either obtain a refund of part of the payment already made in January 2014 or reduce/ eliminate the payment due at 31 July 2014
  4. If a business is run through an LLP or traditional partnership there are proposals to bring in new rules from 6 April 2014 affecting how some members of that partnership may be taxed in future. If you have not already done so, you should review your position with your professional advisers.  These rules are currently subject to close scrutiny by the House of Lords and so it is expected that the commencement date will be postponed slightly
  5. From 6 April 2014 onwards, the annual allowance for pension contributions will reduce from £50,000 to £40,000.  Those looking to top up pension contributions should look to using the current allowances (subject to financial advice).
  6. Another change impacting on pensions is the reduction of the lifetime limit for contributions from £1.5 million to £1.25 million.  Whilst this seems a high figure, many taxpayers have made substantial contributions into pension in the past to fund commercial property purchases and it affects more people than you may think. If your pension pot is already in excess of £1.25 million or may grow to that size before you wish to draw down on it, an election for ‘protection’ may be needed to prevent additional tax charges in the future.
  7. Consider making contributions to ISAs, whether cash ISAs or stocks and shares ISAs. Since 5 August 2013, the range of investments that can be held within an ISA has extended to AIM shares that can also potentially be exempt from inheritance tax after two years.  This is a very useful extension of the rules for many
  8. The 2013/14 annual exemption for capital gains tax is £10,900 and therefore gains of up to this amount can be realised without giving rise to any capital gains tax charge. If the allowance is not used, it is lost.
  9. If your spouse has a lower marginal rate of tax, consider transferring income producing assets to him or her. This can usually be done without any capital gains tax or inheritance tax charges (although do check with your adviser before doing this as there can be other tax consequences). The benefit may be limited for this year but will put things into a better position for future years.
  10. While you are reviewing your year-end paperwork, it is a useful time to review your Will and succession plans, especially if you haven’t done so for more than three years. This could save your beneficiaries significant sums in inheritance tax and professional costs in the future and give you peace of mind now. You should also consider the benefits of a Lasting Power of Attorney if you do not currently have these in place.
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