The Twelve Days of Tax Planning

On the first day of Christmas my accountant said to me: party, party, party.

HM Revenue & Customs (HMRC) provides an allowable tax deduction for an annual event, up to £150 per head. Your staff will really appreciate it. All employees must be invited (and invitation can be plus one) for the event to qualify for the exemption and the cost per head needs to include VAT and costs of food, venue, transport and any accommodation.

On the second day of Christmas my accountant said to me: give gifts to your employees.

HMRC allows you to give an employee a gift at Christmas (or on a special occasion), and there will be no taxable employment benefit providing the gift is trivial, such as a box of chocolates, a bottle of wine or a turkey and that the cost does not exceed £50 and is not cash or a cash voucher.

On the third day of Christmas my accountant said to me: use this time of year as an advertising opportunity by buying gifts for clients.

These are allowable as a tax deduction as long as the gift is less than £50 per client and the gift must also carry a “prominent” advertisement for your business. Gifts to clients of food, drink, tobacco or gift tokens are not allowable, so look at things such as diaries, calendars or coasters.

On the fourth day of Christmas my accountant said to me: claim business use of home tax relief.

HMRC gives some simplified flat rates as a way of calculating some of your home business expenses instead of working out your actual business costs. These range from £10 per month for working 25 hours a month from home to £26 per month for working 101 hours or more. There is some scope for claiming more on home expenses as business use but these could lead to potential Capital Gains Tax issues, so it would be best to first seek advice. Feel free to give us a call.

On the fifth day of Christmas my accountant said to me: don’t forget that mileage log.

With the increasing cost of fuel, it may be more tax efficient to claim back business mileage at 45p per mile (for the first 10,000 miles and 25p per mile thereafter) by keeping a business mileage log rather than reclaiming actual costs.

On the sixth day of Christmas my accountant said to me: get a car as green as your Christmas tree.

Switching to a green company car with low CO2 emissions may reduce your tax liability and there are now more attractive options that fit the low emissions definition.

On the seventh day of Christmas my accountant said to me: look to maximise your interest.

Even though interest rates are very low at present, you may be able to earn up to £1,000 on interest income tax-free depending on your tax bracket, so it’s worth shopping around for higher interest-bearing accounts. Don’t forget that you if you have a company you can charge your company interest on any credit balance on your director’s loan account. The interest payment does need to be reported to the HMRC, so please call us to discuss.

On the eighth day of Christmas my accountant said to me: pay into your pension personally or through a company.

The potential tax reliefs on these contributions could be a great tax planning tool. Give us a call to discuss potential tax relief.

On the ninth day of Christmas my accountant said to me: get the family involved.

If you have family members that have not used up their tax-free allowance then look at bringing them into your company. You may be able to pay them if it can be demonstrated they contribute to the business. Please give us a call to discuss potential benefits.

On the tenth day of Christmas my accountant said to me: think about restructuring your business.

Operating as a partnership or incorporating your business into a company might be more tax-efficient than the structure you currently have. Give us a call to talk through how this could help.

On the eleventh day of Christmas my accountant said to me: be organised.

Don’t wait until the last minute to get everything together, with Making Tax Digital on the horizon and the increased availability of cloud-based software, there are fewer excuses for not getting your books into shape. This should be a new year’s resolution since this would free up more of your valuable time in growing your business whilst we can assist in taking the stress out of your compliance obligations! Please call us to discuss how you can get on top of your business affairs – it may even result in avoiding missing important tasks and deadlines.

On the twelfth day of Christmas my accountant said to me: get yourself a good accountant.

Ensure you have the right advice for growing your business in the most tax efficient way possible. In most instances, it should pay for itself!

For advice on any of the Christmas tips listed above, feel free to contact David Connell on 020 8357 2727 (Ext. 235) or email davidc@rdpnewmans.com

 

Posted in Blog, Tax, Tax Blog.