Day 5 – Essential Year End Tax Planning – For your business…

 

In this week’s blog series our Tax and Wealth Management specialists will be discussing essential tax and financial planning tips which should be considered prior to the end of the tax year on 5th April 2013. In the fifth in a series of five blogs, David Bennett talks about some key tax planning tips for the business owner.

 

The mainstream rates of corporation tax and tax reliefs only available to companies now can make carrying out a business through a company increasingly tax efficient.

 

Corporation Tax Rates

 

Corporation tax rates are currently:

 

Main rate = 24%

 

Small Profits Rate = 20%

 

The main rate will drop to 23% from 1 April 2013 and the Government have stated that they intend to reduce it to 21% from 1 April 2014

 

Capital Allowances

 

The annual investment allowance increased to £250,000 on the 1st January 2013 for a temporary two year period (this increase is time apportioned across your accounts period). The increase gives companies a time limited incentive to invest in plant and machinery with a benefit of tax relief to offset the cost of investment.

 

If you are planning any capital expenditure in the near future, talk to us to see how you can gain the maximum benefit from this relief.

 

Remember if you are refurbishing an existing building or kitting out a new building, that certain energy efficient plant and equipment and water efficient technology could qualify for an immediate 100% deduction in addition to the annual investment allowance (if it is part of the enhanced capital allowances list at eca.gov.uk)

 

Provide green company cars

 

To encourage the use of “green” company cars, there are tax incentives for company cars which produce low amounts of CO2/km.   These incentives allow cars to be provided which can give little or no Benefit in Kind for the employee and give the company a full first year tax deduction for the cost of buying the car.

 

Claim enhanced tax reliefs available only to companies

 

A company may be able to claim enhanced tax reliefs which give a tax deduction of more than 100% exist for a range of expenditure which HMRC are seeking to encourage, including:

 

– Research & Development Tax Relief where relief can be at up to 225%

 

– Creative Sector Tax Reliefs where relief can be at up to 200%

 

– Land Remediation Reliefs where relief can be at up to 150%

 

For loss making companies, the losses created by these reliefs can often also be surrendered to HMRC for a cash tax credit.

 

In addition from April 2013 companies which are generating income from patented Intellectual Property can benefit from a 10% tax rate on that income. This can reduce the tax on that income to less than half its current rate

 

This is an extract from our Essential End of Tax Year Planning Guide 2012/13