Of course you have ! It's that time of the year again when income tax is due for business owners after the tax returns have gone in.
Despite the amount of income drawn, it always feels like too much has gone to the taxman. You are probably left thinking if there was something else that could have been done to reduce the monstrous tax bill. Chances are there were ...
What can you do about it?
For the last tax year not much. However, you have a small window of opportunity over the next 3 months before 5 April to undertake some tax planning so that this time next year you don't end up paying so much it hurts!
There are a number of ways you can reduce your tax liability some of which you are probably aware of and some not. It is always worth seeking the advice of a good tax advisor as no doubt the savings they can obtain for you should exceed the cost of his/her services.
There are some easy ones that you can do right away without much advice but timing is critical. I have outlined these below:
- Gift Aid contributions - any donations to charity / just giving pages etc can reduce your tax by 45% - make a note of these or pass them to your accountant as you make the donation so its not forgotten when your tax return is prepared.
- Pension contributions - you can contribute up to £40,000 per annum to a pension scheme from your company and generate huge corporation tax savings. Any personal contributions can help to reduce your tax by 45% on the gross amount. Consider using a SSAS pension where you are in complete control of the pension's investments.
- EIS / VCT schemes - these are a bit higher risk but essentially are tax favourable investments. By investing in an EIS or VCT investment you can claim income tax relief of up to 50% of your investment. Obviously care should be taken on which investment you choose.
Anything more exciting ?
One of my favourite tax planning tips is using all the family's tax allowances - including the children's. Every individual has an allowance of £11,000 to use in addition to a £5,000 dividend allowance. I've written in a previous blog as to how this works and can generate tax savings of up to £7,200 PER CHILD PER ANNUM!
If you would like to set up a strategic consultation to see how I could help you reduce your tax bill, feel free to get in touch.