As tax advisors, some themes come up time and time again and so we thought it might be useful to share our Top 5.
Salary & dividend mix
Owner managers have the benefit of being able to decide how they remunerate themselves with a combination of dividend and salary. Where the owner has also provided loans to the company then this offers a further opportunity by charging interest and making use of the new savings allowances. There is always a tax optimal mix, but this changes each time HMRC alters tax rates and allowances (i.e. at least annually). Almost all clients we come across can improve their overall net income by fine tuning (or in some cases completely overhauling) their salary/dividend mix.
Claim the NIC Employment Allowance
Most companies (with the main exception of “one man band” companies) are entitled to claim up to £3,000 a year against any Employers’ NIC they have paid. We regularly come across clients who are not aware of this relief. We can go back and reclaim up to four years’ allowances, plus the current year, meaning a potential refund of £15,000.
Research & Development allowances are incredibly generous, allowing you to deduct 230% of your actual spend on R&D against corporation tax, or claim a cash rebate if you are loss making. The problem is that many companies assume that they don’t qualify without ever asking the question. For the sake of a phone call it is well worth finding out.
Further Education Costs
Going to university has never been more expensive and it often falls to the parents to help fund their children’s education. For owner managers, university fees planning can be a very tax effective way funding your children’s further education, often halving the effective cost.
Claim Capital Allowances on Fixtures
Every so often a company will incur significant expenditure on a new capital project such as the purchase of new offices or warehouses. Clients will often pay the purchase price and assume that as it is a building no plant and machinery allowances are available. However, often these buildings contain significant fixtures and fittings on which very valuable capital allowances can be claimed. HMRC won’t just give them to you - you need to identify and claim them and so we recommend to all clients that whenever they have purchased, or are in the process of purchasing, such a property they contact us to see what is available.
As always, you are reminded that this article is generic in nature and you should take no action based upon it without consulting your professional advisor.