Five strategies for tax planning in 2014
Many of us will be making a New Year’s resolution to sort out our finances – but an often overlooked part of putting your finances in order is making sure that your tax planning is effective. Are you claiming all the tax relief you’re entitled to?
To give your financial planning a head start, here are five strategies for efficient tax planning in the year ahead.
- First and foremost, be organised. Make sure that you submit your tax returns on time. In addition, make sure you keep good records. This may not seem very exciting, but HMRC are increasingly stressing the importance of accurate record keeping. Everything tax related – interest statements, dividend vouchers, payslips, P60’s and so on – needs to be kept.
- Make full use of your personal allowances. Even if only one of you is involved, the other could be employed in order to use up his or her personal allowance.
- There’s also nothing to stop children being employed in the family business so as to take advantage of their personal allowance. Remember though that payment must be for actual work carried out, and at a reasonable commercial rate. Your children also have their own annual exemption for Capital Gains Tax, so it may make sense to move some assets into their names, especially if the value of the assets is likely to increase.
- The contributions which an employer makes to a pension scheme are generally tax and NI free for most employees. If you want to boost your pension, it may be worth considering ‘salary sacrifice’ – giving up some of your salary to increase your pension contributions. You’ll need to discuss this with your employer and you may need some specialist advice from an independent financial adviser, but it can be a very effective way of increasing the amount going into your pension.
- If you are running a business, try and incur expenditure just before the end of your tax year rather than just after as this will speed up the tax relief. Examples of the type of expenditure you might consider bringing forward include repairs to buildings and plant, and advertising and marketing campaigns.
Taxation law may be subject to future change.
Comprehensive full overview of clients situation with regular updates and appropriate advice for short, medium and long term objectives. Consistently outperforms the average in investment returns.Mr O - Shipston on Stour