Accountant's tips for minimising Budget impact
BUSINESSES should avoid feeling a false sense of security even if the Budget appeared to change things little for them, according to Streets Chartered Accountants. Though it may not have presented the need for specific action, the underlying trend for ris
BUSINESSES should avoid feeling a false sense of security even if the Budget appeared to change things little for them, according to Streets Chartered Accountants.
Though it may not have presented the need for specific action, the underlying trend for rising taxation could have a heavy impact on business owners and individuals, said marketing partner James Pinchbeck.
Mr Pinchbeck outlined a number of key areas for businesses to address to minimise future tax costs and safeguard wealth.
INCOME EQUALISATION: "April saw the introduction of the 50 per cent tax rate for those with incomes of over �150,000 and a rate of 60 per cent for income between �100,000 and �113,000. To alleviate some of the tax burden it might pay to consider moving income from a high earning spouse to a spouse with lower income."
You may also want to watch:
GOING LIMITED: "For sole traders or those businesses that trade and operate as a partnership, it might be time to look at incorporating the business and forming a limited liability company - they are generally more tax efficient than an unincorporated business."
TIME TO INVEST: "The Chancellor did make a welcome announcement with an increase in the annual investment allowance from �50,000 per annum to �100,000 per annum. This means that businesses can now spend double the amount in capital expenditure, qualifying for an immediate 100 per cent deduction against taxable profits for the forthcoming year."
- 1 Flood warnings issued as police receive multiple calls
- 2 Man guilty of murdering partner's baby son
- 3 GP surgeries in Huntingdon and Papworth start vaccine roll-out
- 4 Vaccine programme in St Ives and Warboys to start this week
- 5 Entrepreneur and family businessman Philip Lalor has died
- 6 Hinchingbrooke planning to expand critical care as Covid cases rise
- 7 St Neots entrepreneur to host 24-hour ‘Speak Up’ event
- 8 Fire service set to step in with vaccine roll-out
- 9 Covid cases highest in Hunts since pandemic began, new figures reveal
- 10 Police investigation closed into deaths of two men in Hunts village
REVIEW YOUR REMUNERATION POLICY: "For businesses owners, directors and managers who are facing higher tax rates and have not reviewed their approach to remuneration, it must now be time to do so. Effective remuneration planning - which can include use of dividend payments to replace salary and the use of employee share schemes - help to optimise earnings. Also, the use of employee benefit trusts provides a tax effective way of rewarding key directors and personnel."
CREATING AND PROTECTING WEALTH EFFICIENTLY: "There are a number of tax efficient investments worthy of consideration - enterprise investment schemes, venture capital trusts and ISAs. The use of pensions should not be overlooked either, despite recently introduced restrictions. Looking to the next generation too, with no announced increase in the inheritance tax threshold, it is now as important as ever to look at tax efficient protection and transfer of assets from one generation to the next."
KEEPING YOUR HOUSE IN ORDER: "With the onslaught of new penalties for late, wrong and fraudulent tax returns, it has never been so important to ensure your tax affairs are handled in a timely and efficient manner. Work with your accountants and tax advisers to ensure not only that you are compliant with current legislation, but that you are also taking advantage of the easily overlooked opportunities to create and protect wealth tax efficiently.