Optimise Tax Efficiency Before the 2019/20 Year End

With the tax year-end drawing closer, accountants at Mapus-Smith & Lemmon recommend now is the time to plan financial strategies for optimum tax efficiencies.

Samantha Melton, chartered certified accountant at the Downham Market office, says:
“Across the board, both on a business and personal level, we are encouraging tax payers to make financial planning a New Year priority for the 2019/20 year end on 5 April 2020 and beyond.  We can devise strategies for minimising tax liabilities, increasing business profitability and maximising personal wealth.”

The firm’s checklist includes making the most of personal tax allowances, enhancing capital allowances, holding on to more profit, planning ahead for retirement, utilising ISA allowances and minimising inheritance tax.

In the current tax year, each individual is entitled to a personal allowance of £12,500 tax-free income.  Within a family, it might be appropriate to make the most of this by transferring income to a spouse, partner or child as a gift. Also worthy of consideration are the Marriage Allowance, pension scheme contributions and Gift Aid donations.

For business owners, the Annual Investment Allowance has increased from £200,000 to £1 million for plant and machinery expenditure (except cars) incurred from 1 January 2019 to 31 December 2020 and there is the Enhanced Capital Allowance for energy-saving equipment and low carbon emission cars as well as Writing Down Allowances and the Structures and Building Allowance.

Beyond managing corporation tax to best advantage, it is beneficial to look at ways of holding on to more business profit whether it be through dividends or taking a salary; pension contributions, incorporation of a partner, personal tax allowances and personal income from property rental used for business purposes.

For tax-efficient savings there is now a range of ISAs including the Lifetime Isa, Help to Buy Isa and Junior Isa and then there are benefits of putting savings into pension schemes.  Each saving option has its own characteristics.

Finally, inheritance tax (IHT) receipts have reached a record high and for those whose estates will exceed the existing nil-rate band, forward planning can help to minimise the impact of IHT.

For help regarding these complexities and any other accounting queries, please contact Samantha Melton on 01366 383300.   

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