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Here is a list of things that you can consider before the end of the tax year.

Split between individuals and companies but there should be something for everyone

INDIVIDUALS

Surplus Funds: Put them to good use or lose the tax benefit.

ISA’s

  • £20,000 p er person can be invested tax-free in an ISA.
  • £9,000 can also be invested in a Junior ISA for children under 18.

Tax-efficient investments

There are annual limits on investments in

Seed Enterprise Investment Scheme (SEIS)

  • A maximum of £100,000 per tax year can be made in start-up companies that qualify for the SEIS.
  • Income tax relief is available at 50%.
  • No tax on gains made on a future sale if the investment is held for over three years.
  • Dividends taxable.

Venture Capital Trusts (VCTs)

  • A maximum of £200,000 per year.
  • Income tax relief on 30% of investment.
  • No tax on gains made on a future sale.
  • Dividends are tax free

Enterprise Investment Scheme (EIS)

  • A maximum of £1 million per year. (up to £2 million if at least £1 million is invested in knowledge intensive companies).
  • Income tax relief at 30%.
  • No tax on gains made on a future sale if the investment is held for over three years.
  • Dividends taxable.

Pension contributions

  • Pension contributions enjoy tax relief at your highest marginal rate of income tax.
  • The relief is restricted to the lower of your annual allowance or net relevant earnings.
  • The Annual Allowance (AA) is £40,000 but is restricted for higher earners.
  • You may also be able to utilise unused AA from earlier years.
  • Please contact us as this can get very complicated.

Gift Aid

  • Taxpayers donating through Gift Aid means charities can claim 25p for every £1 donated.
  • Higher rate taxpayers get tax relief on the difference between the rate paid and basic rate.
  • In certain circumstances, the contribution can be carried back to the earlier year.

Employees: Working from home

  • Employers can pay employees up to £6 a week tax free to cover their working from home expenses.
  • Where this is not paid, employees can apply to receive the tax relief directly from HMRC.

5 April deadline dates

The introduction of the Health and Social care levy means that 5 April is the

  • Last date for paying dividends before the income tax rate increase
  • Last date for paying bonuses before the increase in employers and employees NIC.

Loss of personal allowance for higher earners

  • Your Personal Allowance is reduced by £1 for every £2 your income exceeds £100,000.
  • This can create an effective tax rate of 60%.
  • You may wish to consider Pension and/or Gift aid contributions mentioned above
  • Consider transferring income earning assets to the lower earning spouse.

Trading and property allowances

  • Many may have started a small trade or decided to let property recently.
  • Up to £1,000 each tax year in tax-free allowances for property or trading income.
  • If you have both types of income, you can get a £1,000 allowance for each

Trading losses

  • Many businesses had a hard time because of the pandemic.
  • There is a temporary extension to the loss carry back rules for trading losses.
  • For tax years 2020/21 and 2021/22, unrelieved losses can be carried back longer.
  • They can be set against profits of the same trade for 3 years before the tax year of the loss.
  • There is a £2m cap on this loss relief.

CGT Annual exemption

  • Capital Gains Tax is only payable on your overall gains above the Annual Exempt Amount.
  • This Annual Exempt Amount is £12,300.
  • Consider selling assets standing at a gain to use the allowance.

COMPANIES

Bonuses

  • Bonuses can be accrued so that they fall within the current accounting period
  • The bonus must be both due and payable before the year end
  • The bonus must be actually paid within nine months of the year end.
  • Note that payment after 5 April 2022 will incur increased NI EE and NI ER

Pensions

  • Employees may prefer a contribution into their pension scheme instead of a bonus

Electric cars

  • Electric cars used for business benefit from enhanced capital allowances for the business.
  • They also provide a very affordable benefit in kind for the employee 

Building repairs and decorating

  • Revenue expenditure is deductible against profits.
  • Consider whether any such work can be done before the year end

Capital Allowances

R&D

  • 31 March 2022 is the last date to claim for accounting period ended 31 March 2020.

Losses

  • Many businesses had a hard time because of the pandemic.
  • There is a temporary extension to the loss carry back rules for trading losses
  • This relates to losses made in accounting periods between 1 April 2020 and 31 March 2022
  • The loss carry back period is extended to three years
  • Losses should be set against profits of most recent years first before earlier years.
  • There is a £2m cap on this loss relief.
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