Easy to read, accessible tips and strategies for small business owners
Action to take before 31 March 2023
Once we pass the end of the current financial year, 31 March 2023 for companies and 5 April 2023 for individuals, the opportunity to take legitimate action to save tax in the 2022-23 tax year will evaporate.
I would have to write a book to lists all of these opportunities but have listed below some of the ripest tax planning fruit.
If any of the issues included catches your eye, please call me for more information.
- The so-called super-deduction expires 1 April 2023. This allows you to write off 130% of the cost of qualifying assets against your taxable profits.
- If your profits from 1 April 2023 are set to exceed £50,000, you are likely to see an increase in the rate of corporation tax you pay from 19% up to 25%. In which case it may be of benefit if you defer costs and investment in tax allowable assets until after 1 April 2023.
- Talk to your pensions advisor. If your company has surplus funds consider a top-up in your SIPP or company pension scheme.
- If you have an interest in associated companies this will affect your corporation tax payments on profits from 1 April 2023, when the rate increases to 25%. HMRC will reduce the break points at which lower rates might be used. Worth considering restructuring to avoid this affecting your tax payments.
- If you have furnished holiday let (FHL) properties, time to check out your occupancy records to make sure you still qualify for the favourable tax treatment afforded to FHL owners for 2022-23.
- If you are in the process of selling buy-to-let property, have you considered the capital gains tax implications? Timing could be critical; to sell before or after 5 April 2023. There are also other planning options open to married couples and civil partners.
- If you let rooms in your home, don’t forget to claim the rent-a-room relief. Exempts up to £7,500 in rents if you qualify.
The rest of us…
- Have you utilised your capital gains tax, tax-free annual allowance. From 5 April 2023 this is reducing from £12,300 to £6,000, and a year later to £3,000. So make the most of the current allowance.
- Have you made – and recorded – any gifts made in the last tax year. Annual reliefs for a bunch of inheritance tax reliefs, expire at the 5 April 2023 for 2022-23.
- If your taxable income looks to be exceeding £100,000 the marginal rate of income tax charged on income between £100,000 and £125,000 would be 60%. This occurs as between these two amounts you gradually lose your personal allowance. Consider options to keep your income below £100,000. For example sacrifice salary for additional (tax-free) pension contributions.
- Don’t forget the humble married allowance. This affords married couples and civil partners the option to transfer unused personal tax allowances to their spouse – as long as the recipient partner is a basic rate tax payer.
- Worth applying online for a State Pension forecast if you are approaching retirement. And make an appointment with your pensions advisor to see how your private pension arrangements are faring. Still time to make a top-up in the current tax year.
Keep in touch
If you want to make sure you have all your tax planning options under consideration, please call.
Bob Edwards, firstname.lastname@example.org, call mobile 07879 896073