12 Tax Tips of Christmas

No one wants to pay more tax than they have to, either personally or within their business.

That’s why we thought we would deliver you the ultimate festive gift by offering your 12 tax tips for the year ahead…

 

On the first day of Christmas, McGills gave to me a tax tip on:

Dividend Taxation – Have you utilised the zero per cent Dividend Tax Band of £2,000?

Don’t forget the dividend tax rate increase next year by 1.25 per cent.

 

On the second day of Christmas, McGills gave to me a tax tip on:

Corporation Tax – Have you made use of all of the relief and allowances available to you? Have you made a loss, or can you carry previous losses over?

Corporation Tax rates increase from April 2023 on a tapered scale so make sure you make the most of the current lower rates that are available.

 

On the third day of Christmas, McGills gave to me a tax tip on:

Capital Gains – Have you used your annual exemption for 2021/22 of £12,300?

If you have sold a business or shares in the last year you could make use of Business Asset Disposal Relief, formerly known as Entrepreneur’s Relief, which could cut your Capital Gains Tax bill in half.

 

On the fourth day of Christmas, McGills gave to me a tax tip on:

Incorporation – Becoming a Limited Company, if you haven’t already, could offer you a more tax-efficient business structure with a greater variety of reliefs and allowances.

 

On the fifth day of Christmas, McGills gave to me a tax tip on: 

Capital Allowances – The Annual Investment Allowance will now remain at £1 million until 1 January 2023. You should also take advantage of the Super Deduction if you have made investments in plant and machinery.

 

On the sixth day of Christmas, McGills gave to me a tax tip on: 

Research & Development tax credits – Businesses claimed more than £5 billion last year – do you have any eligible projects?

Thousands of pounds of relief go unclaimed every year by businesses.

 

On the seventh day of Christmas, McGills gave to me a tax tip on:

Inter-spouse transfers – You can maximise capital gains and income tax allowances as well as minimise rates through these exempt transfers.

 

On the eighth day of Christmas, McGills gave to me a tax tip on:

Salary vs Benefits – Exchanging part of your salary for payments into an approved share scheme or additional pension contributions could minimise liabilities

 

On the ninth day of Christmas, McGills gave to me a tax tip on:

Annual pension allowance – You can invest up to £40,000 a year into a pension tax-free, which can help to reduce your taxable income and lower your overall annual tax bill.

 

On the tenth day of Christmas, McGills gave to me a tax tip on: 

There are also a wide range of tax-efficient investment options, which can help to reduce your liabilities.

Are you using, or have you considered the following?

  • ISAs
  • Share Schemes
  • EIS And SEIS
  • Venture Capital Trust investment
  • Community investments
  • Social Enterprise investments
  • Life Assurance bonds
  • Offshore bonds

 

On the eleventh day of Christmas, McGills gave to me a tax tip on: 

Inheritance Tax – Have you used your maximum gift allowances? You can give up to £3,000 per year without it being added to the value of your estate on death. Not given in previous years?

You can backdate this exemption by up to a year, doubling the amount you can give in a single year.

 

On the twelfth day of Christmas, McGills gave to me a tax tip on:

Pension drawdown – If you are 55 or over, you may be able to start drawing down pension benefits now from a personal pension such as a SIPP, even if you are still working.

To find out how we can help you make the most of this guidance and put a tax plan in place that drastically cuts your tax bill give us a call, drop us an email and get in touch.

 

From everyone at McGills Chartered Accountants, we hope you have a very merry Christmas and a happy and prosperous New Year!