Pre tax year end planning
This post comes as a result of looking at a couple of potential clients and checking whether they have considered a number of areas which will impact on their 2009/10 tax, particularly in respect of small limited companies:
- Is the shareholding in the company arranged in the most tax efficient way? A gift between husband and wife is tax free, but should not be done regularly as it may be treated as a right to income
- If available have the maximum dividends been declared to make full use of the shareholders personal allowance and basic rate tax band (and minimise and higher rate tax if applicable). If not now is the time to look at it not on 31 March!
- If no directors remuneration has been paid for a cash poor new business consider running the payroll as this will have 3 advantages:
- If paying above ~£475 per month the full years NI contribution will count
- Even if there is no cash available, this becomes due tax free to the director when there is cash
- This is a taxable expense and even if there is no corporation tax saving this year, a loss can be set against future years profits
- If the company did not trade immediately after incorporation, consider extending the year end at Companies House so you can easily compare the first year to subsequent months. This will also delay the date corporation tax is due.
Time is short, make the most of the tax opportunities you have. Alastair Wood, AW Accounting – Accountants who “speak your language”
