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Free tax saving articles

We offer regular articles on tax saving ideas for clients and these can be accessed by following the links below:

Top 10 tax-free benefits for small businesses

6 tax (and other financial) benefits of being married

How to save tax by claiming your professional subscriptions

5 tax myths of working from home - debunked

Free tax saving tips

Divorce & CGT

Transfers of assets between couples who are separated, but not divorced, can count as if they were a sale at their full value. This  can trigger a large CGT bill. However, this trap is avoided where the transfer is made in the same tax year as the separation. So,  it makes sense to make the transfer as quickly as possible (i.e. before 5th April following separation), avoid the CGT, and argue  about the valuation (and everything else) later. 

Claiming back pre-trading expenses

If when you started your Company you incurred expenses associated with it, these are called pre-trading expenses.  You should  claim a reimbursement from your Company for these costs as soon as it’s formed. Even if your Company can’t pay you straight  away, the expenses will be recorded in the books and therefore will be eligible for a 20% Corporation Tax deduction.  You can  withdraw the money that the Company owes you, tax-free, at a later date when the Company can afford to pay you.

Tax-free hotel perks

Whenever you work away from the office and incur additional expenses for personal costs such as pay-per-channel, butler  service or mini-bar purchases these are taxable on you.  However, where additional services are part and parcel of the room  tariff and not separately charged on the bill, there’s no tax to pay. So if you use tend to use these add-on services make sure you  tell the hotel in advance to include them as part of the room tariff.  

Getting some extra help with the credit card bill

If you don't tend to pay off all the balance on your credit card immediately (and, incidentally, I recommend that you should pay  it off) you'll be charged interest by your credit card provider.  So, you might be interested to know that interest charged for  private purchases made by a director or employee using a company credit card isn’t a taxable benefit in kind. This means you’ll  save money by using the company credit card for your private purchases.  Just remember to reimburse the Company in full for  the cost of your purchases each month. How to make full use of your business property relief When you sell your business  consider passing it to your children rather than your spouse.  Because of Business Property Relief  the gift will be free of inheritance tax and will leave more of your estate’s nil rate band available to cover other gifts.  Alternatively, leave the business to a discretionary trust as this achieves a similar result.  How to ensure payments in lieu remain tax-free  Payments in lieu of notice are usually tax and NI-free. But where the employment contract says you can pay off an employee  without them working their notice period, this will make the payment liable to both NI and tax. Consider whether existing  contracts need a pay-off option, and remove it if they don’t.  Tax Inspections:- 3 things to remember to save you worry, time and tax Share Get in touch with the Taxman before the visit. It’s perfectly acceptable to ask the Taxman why he wants to inspect your records -  he will usually tell you. This might allay some of your worries and allow you to focus on what he would like to inspect. Review  the previous four tax years’ returns. If you find errors, notify him before the inspection starts.  This will help to reduce any  penalties he charges on underpaid tax. Be courteous as well because this helps the visit to go smoothly.  Avoiding an unexpected car benefit Where a husband and wife work for the same company and have a company car, tax can be saved by providing it as a benefit-in-  kind to whichever one is taxed at the lower rate. However, if the lower earner is paid less £8,500 per year (including the car  benefit), increase their pay to take them over this.  If you don't then the higher paid spouse will be taxed on it.  Qualifying for Entrepreneurs Relief In order to qualify for certain Capital Gains Tax reliefs on the disposal of your Company, ensure that before you sell it or wind it  up that your Company’s investments ( e.g. cash in the bank) are no more than 20% of its total assets for more than 12 months  prior to closure/sale. One way to do this tax efficiently is for your Company to use surplus cash to pay a substantial pension  contribution to you. Avoiding late filing penalties under RTI Ensure PAYE & NIC payments reach HMRC by the 19th of each month. If you pay electronically, the deadline is extended by  three days to the 22nd. I also highly recommend that you register to use the Taxman’s online Dashboard.  This will help you  keep track of payments to make sure sure you haven't missed any months. How to deal with illegal dividends The Taxman will usually insist an incorrectly paid (i.e. illegal) dividend is treated as salary. This could trigger significant tax and NI bills. Counter this by referring him to his own guidance which says it cannot be salary unless approved by the Company. It will instead count as a loan to the director. This may have its own tax consequences, but these can be managed better than a one off PAYE/NIC hit. Getting your dividend documentation correct Company law says that once you’ve established the availability of distributable profits you can pay a dividend.   The Taxman can  challenge payments described as dividends if they have not been declared and paid in accordance with company law. Indeed, if  the directors allow dividends to be paid when there are not enough retained profits it will be treated as illegal.  Protect yourself  by recording the directors’ proper consideration on a Distributable Profits Board Minute. E-mail Paul Woodcock for a template.  Getting the most out of tax-free expenses Paying the Taxman’s benchmark subsistence rates reduces your tax admin. Up to £25 per day can be paid (£5 for breakfast if the  business journey starts before 6am; £5 if the employee spends more than five hours away and buys one meal; £10 if they’re out  for more than ten hours and they buy two meals; £15 if they are out beyond 8pm, and buy an evening meal) irrespective of  whether you or your employee spends this on food or not. Whatever you or they keep is tax-free and NI-free.  This means it can  be a cheap way for you to increase your and their take-home pay.  When can gifts be omitted from your P11D? Don’t declare a gift from a third party to one of your directors on a P11D unless your company was involved in arranging it. This  applies even where the gift is either in the form of entertainment (e.g. a day out at the races), or where the cost of the gift is  less than £250 (including VAT). 
Tax Tips for small businesses