Aim for a tax efficient mix of salary, dividends, bonuses and benefits. Consider Enterprise Management Incentives and Approved share option schemes. These arrangements can prove tax efficient for both employers and staff.
Consider further pension contributions
Pension schemes still represent one of the few Government sponsored tax saving vehicles where significant tax relief is still available.
Where the company makes a contribution on behalf of the employee, or the individual makes a net payment to the pension provider, it is now possible to receive tax relief on an amount equal to earnings (subject to a cap of £245,000 for 2009/10).
Furthermore, where an employee agrees to sacrifice a portion of salary in exchange for an employer making an equivalent employer pension contribution, there can be NIC savings for both employee and employer.
However, additional care is required for high earners considering additional pension contributions before 6 April 2011 over and above their usual monthly contributions (whether personal or employer paid) due to anti-forestalling rules introduced in Budget 2009. These rules could mean that additional contributions result in a tax charge on the employee. High earners for these rules are those with total income (note not just employment income) of £150,000 or more in the current tax year, or in one of the previous two tax years.
Maximise tax breaks on capital expenditure
Capital allowance claims permit taxpayers to offset certain capital expenditure against their business income. These include, amongst others, the Annual Investment Allowance and Enhanced Capital Allowances for qualifying energy and water efficient expenditure, which are relevant for both corporate and unincorporated businesses.
Maximise tax breaks on capital expenditure
Capital allowance claims permit taxpayers to offset certain capital expenditure against their business income. These include, amongst others, the Annual Investment Allowance and Enhanced Capital Allowances for qualifying energy and water efficient expenditure, which are relevant for both corporate and unincorporated businesses.
There is an additional temporary 40% rate of first year allowance available to all businesses for expenditure incurred on plant or machinery qualifying for the ‘general pool of expenditure’ in the 12 months from 1 April 2009.
Review loss relief claims
An extended loss relief was announced in November 2008 enabling businesses to carry back trading losses of up to £50,000 for up to three years instead of the usual one year limit. Budget 2009 announced an extension of this relief, to cover an additional £50,000 of trade losses incurred in the year following that announced in November 2008.
Furnished holiday letting properties
Overseas furnished holiday letting properties located outside the UK, but within the European Economic Area, can qualify for the furnished holiday lettings regime. This treats the furnished holiday lettings business as a trade rather than an investment activity, with favourable capital allowance, loss relief and capital gains consequences.
Review loss relief claims
An extended loss relief was announced in November 2008 enabling businesses to carry back trading losses of up to £50,000 for up to three years instead of the usual one year limit. Budget 2009 announced an extension of this relief, to cover an additional £50,000 of trade losses incurred in the year following that announced in November 2008.
Furnished holiday letting properties
Overseas furnished holiday letting properties located outside the UK, but within the European Economic Area, can qualify for the furnished holiday lettings regime. This treats the furnished holiday lettings business as a trade rather than an investment activity, with favourable capital allowance, loss relief and capital gains consequences.
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