Dean & Co, 33 Haigh Moor Way, Royston, Barnsley, South Yorkshire. S71 4EG
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Barnsley accountants service since 1998. Wakefield accountants service since 2009. Links
Tax Accountants and Business Advisors
01226 701017
Dean & Company
How to Avoid Paying Tax
It is not advised that anybody do anything illegal here. Evading taxes is illegal, but avoiding taxes is quite legal. There are many tax incentives, a few loopholes so why risk doing anything illegal when you can still save a fortune and still sleep easy at night.
Business
* Sole traders earning £5,315 per year or less are exempt from class 2 national insurance. However, it maybe in your interests to pay NI contributions for pension or benefit purposes.
* You can employ your spouse/partner in your business and you can pay them up to their personal allowance of £7,475 per year. You can pay them a salary £102 to £136 per week without incurring any national insurance charges and still get NI tax credit for pension and benefit purposes.
* Higher rate tax paying sole traders. Have you considered employing your spouse/partner and employing them in your business and thereby, paying a lower rate of tax?
* Some people make the mistake of not claiming some expenses because they do no have a receipt. Just keeping some record in your books is usually acceptable.
* If you use any part of your home for business use, ensure you claim for gas, electricity, water, mortgage, telephone, council tax, broadband, cleaning, maintenance, repairs, rent, insurance etc. The proportion of which depends upon the size and time of use.
* Did you know, you can employ your child, if aged 13 or over, earn less than the personal allowance of £7,475 and use their salary as an allowable expense to reduce your tax?
* Sole traders in the high rate tax band, have you considered trading through a limited company trading structure? Similarly, directors, whom have low earning may be better off trading as a sole trader.
* You can offset your losses from previous years against the profits of future profits.
* Do you know, you can that you can use up any overlap relief when you commenced trading by changing your year end date?
* If you made a loss in a share purchase for an unquoted company you can offset this against profits from your own business.
* If you sell your business after 1 year you pay 10% capital CGT rather than the normal 18% and 28% up to £10 million.
* If you are a director of a limited trading have you considered allocating some company shares to your spouse/partner to transfer income from the company to them?
* If your business is in a position to do so you may be better off obtaining a loan from your company rather than a bank and thereby, utilising tax relief on interest.
* Making your spouse and/or family part owners can reduce capital gains tax when you wish to sell it.
* Get the timing right when buying fixtures, fittings and machinery to ensure maximum tax benefits. i.e. Making a purchase just before your accounting year end ensures you have maximum relief the following year.
* To be able to allocate something as an allowable expense you may need to show how it is beneficial for you business before you can use it.
* Have you tax collected through your PAYE code will give more time to pay if you submit your tax return online before 30th December.
* You can apply to reduce your tax payments on account if your income decreases.
* You can avoid many penalties by keeping your records in order and filing on time.
* Be sure to get professional advice if your taxman tries to contact or visit before you reply. Answering questions incorrectly can be very expensive.
Limited Companies
* The most tax efficient way of paying yourself from your limited company is by utilising a mixture of salary and dividends as dividends incur no national insurance tax.
* Do not fall into the trap of not correctly making notes in the minutes about vouchers for dividends and HMRC trying to classify payments as loans or salary
* Did you know that the first £300,00 is taxed at the small profits rate (20% 2011-2012) and then the rate increases (26% 2011-2012) up to £1.5 million. This is dependent on the number of associated companies under your control.
* Contributions of £2,880 net per year into pension for your children or grandchildren are tax free.
* You can reduce employer’s national insurance payments and other benefits by making by making them a partner in your company.
* You may be better off if your personal property is owned by your company or visa versa.
* Some employees expenses which are directly related to their employment such as professional organisation subscriptions are allowable expenses.
* Annual allowances of up to £50,000 put into a registered pension scheme are protected from tax
* You can pay your shareholders, whom are also employees, different levels of dividend by utilising different share classes.
* Ensure that you avoid IR35 through your contacts. Your company may have to pay more NI and PAYE if you have few customers whom you supply personal services
If you are a director of a limited company then you are an employee as well as an employer:
* Tax free parties for your employees for a cost of up to £150 per employee.
* Failure to declare benefits in kind and expenses paid to or for employees and directors can result in £3000 fines. You must complete a P11D and P9D before July every year.
* Having a company registered pension scheme can save national insurance contributions.
* Are you aware operating a staff suggestion scheme allows you to pay £5000 free of tax to your employees for suggestions they make outside normal duties?
* Employing someone for more than 20 years enables you to pay them a £50 gift (not cash or vouchers) per year of service.
* Selling assets to use your capital gains allowance, paying interest and royalties are some other efficient ways of paying yourself.
* All PAYE payments can be made quarterly instead of monthly if less than £1,500 per month.
* Are you sure self employed people working for you are not really your employees? This can be a very expensive mistake.
* Paying students up to their personal allowance (£7,475) is tax free if they attend college until the end of the tax year and have other employment other than during holidays. They have to fill in a P38S to do this.
* Reduce tax administration by applying for dispensation on form P11D so you do not have to report some expenses.
* Paying part of an employees salary as child care vouchers (up to £55/week) can save national insurance and tax for both employees and the company.
* Ensure that all your employees get the correct amount of allowances for their wages by completing form P45 and P46. Especially, for part-time and family members used as employees.
* Adjusting the frequency of when bonuses are paid to yearly or twice yearly can lower national insurance payments for employees (except directors)
* Limited companies may be better off transferring ownership of vehicles for personal use. It will then, not be classed as a benefit in kind and not have to pay extra tax.
* Moving expenses for employees up to £8000 can be paid tax free if paid for by the company (original receipts required).
* Termination payments for employment contracts are tax free up to £30,000.
* Your employees can get special tax rates for purchase of your company shares in an company share scheme. Can also, be an incentive to employees to work more hard.
* You can get tax free eye tests and lenses for employees if you use computers at work.
* Consider your company purchasing bicycles for your staff to cycle to work. Your employees are not taxed for the use of bicycles.
* Gifts such as goodwill gifts are tax free if not a reward for employee services.
* Cost for employee check-ups are allowable expenses.
* Drivers get an extra 5p a mile for every employee passenger for all journeys connected to your company.
* Employees may make use of a company mobile phone for private use if the company retains ownership.
* Registered pension scheme operated by the company get tax relief on contributuions.
Personal
* 10% of all rent for furnished property is allowable expense for wear and tear for furniture.
* Wedding Gifts of up to £1000 to extended family and £5000 to children are tax free.
* The inheritance tax nil rate band enables you to leave £325,000 in your will and the remaining funds to your spouse/partner.
* Do you have sufficient life and critical illness insurance?
* You can have life insurance protected from being considered part of your estate for inheritance tax purposes by having a policy written in trust.
* Inheritance tax free gifts of £3,000 per year.
* Buy-to-let properties maybe best purchased in your and spouse/partner joint names to divide income.
* Gifts within 7 years are counted when calculating inheritance tax.
* Remember to sign a gift aid declaration for all your charity donations to enable them to claim back tax relief.
* Remember to claim child tax credits for all children under 16.
* Take advantage of the ISA investment allowance. Currently £10,680 tax free.
* If your partner or spouse are in a lower tax band than yourself you can transfer investments to them and reduce income tax.
* No tax payer are eligible to receive all bank and building society interest without tax.
* Investments of £500,000 per year in unquoted small companies attract tax relief under the Enterprise Investment Scheme.
* Investments of £200,000 in Venture Capital trusts reduces tax by 30% if held for 5 years.
* If your pension fund exceeds £1.8 million it will incur higher tax charges.
* Did you know if you purchase a buy-to-let property with credit you can claim tax relief on interest?
* It is a good idea to make a will to protect your partner or spouse. Wills are cancelled automatically upon remarriage.
* Investments of up to £30,000 in premium bonds are income tax free and can win up to £1 million per month.
* Purchasing EIS shares can defer tax from large capital gains.
* Did you know if you move home and rent your old home this will not incur any capital gains tax when you sell it?
* Be aware of stamp duty levels when buying a house. i.e. £125,000 purchase incur no SD but a £125,001 purchase incurs £1250 tax.
* Up to £4,250 for renting a room in your house is tax free.
* Allowable expenses of £1,500 per property for insulation.
* For investments and assets make full use of your capital gains exemption of £10,600 per year.
Value Added Tax
* The VAT cash accounting scheme is available for turnover of less than £1,350,000 so that you pay VAT when you receive payment rather than at invoice date.
* You have to register for VAT if your rolling 12 month sales exceeds £73,000.
* You have 10 days more for any VAT payments for VAT returns made online.
* VAT on goods 4 years before registration can be claimed in nearly al cases.
* If you deregister for VAT, any invoices received after the deregistration date can still be reclaimed for VAT.
* Vat on Bad debts can be reclaimed up to 6 months.
* Small business’s can take advantage of the flat rate scheme and pay less vat, for turnovers of less than £150,000 per year.
Whilst we endeavour to ensure that the information on this website is correct, we do not warrant its completeness or accuracy.