This article is aimed at SMEs. The end of the tax year is approaching fast so now is a good time to think about ways to secure some valuable tax reliefs.
Salary
Make sure you have paid a tax-efficient salary, if appropriate, to any directors. Also consider paying a salary to your spouse if they work in the company or perform the role of company secretary. If you have adult children who help you in your business, consider paying them a commensurate salary.
Dividends
If you have profits available to distribute, make sure you have voted dividends to utilise your dividend allowance and your basic rate band..
Pensions
If you can, consider making an employer pension contribution from the company into a director’s personal pension pot. Check that the pension scheme will accept an employer contribution and also check that the director has scope in their pension allowance
Savings income
If you have a directors’ loan account with a substantial credit, i.e. the company owes you, you could charge the company interest. If you do not have a loan account with credit you could make a formal loan to the company. This way you could extract monies via an interest charge.
The interest is taxed in the tax year of receipt, from the individual’s perspective. So, it would be possible for you to make a loan to the company ahead of 5 April 2019, and make a charge for interest for the next twelve months to include in the 2018/2019 taxable income figures.
Trivial benefit exemption
Since April 2016 employers have been able to spoil their employees with small benefits that do not count as taxable perks. This is called the trivial benefits exemption.
For more information on trivial benefit exemptions visit https://www.bwbca.com/post/interested-in-extra-tax-free-perks-there-s-still-time
For more information, speak to one of our team
This summary is published for the information of clients. It provides only an overview of the main points, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this summary can be accepted by the authors or the firm.
Brayne, Williams & Barnard Limited
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