During the last 12 months, many of us have experienced challenging times and faced an unprecedented cost of living crisis.
As we enter a new year, many of us will be looking at how we can make our money go further, but one area that is often overlooked is taxation.
As we start to look towards the new tax year in April, some immediate actions must be taken now to make the most of the opportunities on offer in both our personal and business lives.
If you do not plan now, you might miss out on many tax-saving opportunities and end up paying more tax than is required.
Tax planning for businesses
For those running a business, the amount of tax paid will always be directly linked to the amount of net profit you have earned.
Effective tax planning can ensure you have the capital needed to invest in and grow your business. In the next year, business owners need to consider:
- The merging of the R&D tax relief schemes for SMEs with the RDEC scheme for larger businesses in April, which may generate greater relief against qualifying expenditure.
- The permanent extension of the full expensing Capital Allowance, which allows businesses to claim a 100% first-year allowance on new qualifying plant and machinery investments.
- Ensuring that any withdrawals from the business are made in the most tax-efficient way.
- Structuring shareholdings and borrowings correctly.
The importance of tax planning for individuals
With many personal tax allowances and exemptions frozen until 2028, taxpayers need to take a longer-term view of their finances, particularly as inflation continues to drag them into higher tax bands.
You should take advantage of the current allowances and tax-saving opportunities available to you by:
- Boosting your pension using the higher Annual Allowance and abolition of the Lifetime Allowance.
- Disposing of shares and assets tax efficiently.
- Making the most of dividends, despite the lower rates of relief now on offer.
- Maximising the use of allowances, reliefs and exemptions.
- Capitalising on the new, lower rates of National Insurance Contributions for employees and the self-employed.
- Using discounted Gift Trusts/AIM Investments.
- Utilising tax-efficient investments, including VCTs and EISs.
- Reducing Inheritance Tax liabilities through wills and estate planning.
- Bringing forward gains into the current tax year before the current exemption is cut in half again on April 6 2024.
Ready to guide you
Make tax planning your new year resolution and avoid a shock when your next tax bill arrives.
Take the time now to reduce your liabilities before the financial year ends and ahead of the changes to tax allowances and rates.
At Lamont Pridmore, we help our clients reduce their tax bills by maximising the opportunities available to them – helping them to save more than £8 million last year alone.
Our approach relies on good housekeeping to ensure you can legally claim the allowances and reliefs you are entitled to and that you’ve considered the tax implications of every major decision.
Get in touch today to find out how we can help by calling 0800 234 6978 or emailing [email protected]
