24 Tips and Treats to Help You and Your Business – Part 2

by | Jan 21, 2022 | Uncategorized

For those who are following our blogs, here is the second part of our top tips and treats you may find useful.

Tip 9 – Gift some not-so trivial benefits

We love some trivial benefits here at Mayflower Accountancy. What a way to thank your team by giving them a gift to say thank you – completely tax-deductible!

Let’s get the find print out of the way…

  • Each benefit can’t cost more than £50
  • It can’t be cash or a cash voucher
  • It cannot be in their contract or linked to performance

A trivial benefit could be anything, from a hat to a frying pan. But here’s the biggie – Directors can benefit from this as well. However, if your company is a ‘close’ company (five or less shareholders), you can only get £300 worth of benefits in the financial year.

Tip 10 – Share your tax allowance with your spouse

There are couples out there who are leaving money on the table. The marriage allowance is there to spread some of the tax burden across and could be for you. If you’re a basic rate taxpayer (£50,270 or less) and your spouse is earning below the personal tax allowance (£12,570), they can give you some of their personal allowance to save on your tax bill.

You have to be married or civil partners, but it could be worth £252 for your household. Not claimed this before? Well, you can backdate any claims from April 2017. So, dig out your P60s and it could cover some household expenses for you all.

Tip 11 – Set up a Personal Tax Account

Maybe you’ve seen the above tax tip and thought ‘Blast, how do I go back to 2017 and check?’ Well, you can with a Personal Tax Account. Just search “Personal Tax Account HMRC” or visit www.gov.uk/personal-tax-account and follow the steps to set one up.

Here you can check and update your marriage allowance, check your taxes, look at your tax code and other things.

Tip 12 – Top up your state pension

This is why we love a Personal Tax Account so much because you can keep an eye on your State Pension. But why might you want to do this?

You need to make at least 10 years of qualifying National Insurance contributions to start to receive a State Pension, or 25 years of qualifying National contributions to receive a full State Pension. If you had a period where you did not work, you may be short a few years of a full State Pension for example.

In this scenario, it might be worthwhile to top up your pension with Class 3 voluntary contributions. This would mean for a payment you would increase your State Pension. A full State Pension at the moment is £179.60 a week so you need to complete some calculations to see how long you need to get that cash back of any voluntary contributions you make, but it could be within a few years you’ve earned more from your State Pension so you’re covered.

As ever, seek proper financial advice and seek a State Pension Forecast to get a good idea of what you’ll earn when you retire. Despite this, we’ll always usually suggest a private pension on top, as £179.60 a week to live on may not be an awful lot.

Tip 13 – Pay your tax early

Yes, this is a tip but a good one for two reasons. First, HMRC love it when you pay your tax early. So much so, you will receive interest. It’s not eye-watering, it’s just 0.50% at the moment, but this comes to our second point. It gets the cash out of your hands and into theirs where it is destined anyway.

Whilst those rates of interest are not brilliant, if you struggle to keep and ring-fence your tax money, just pay it over. It gives you one less thing to worry about. If you are disciplined then there are better ways to save money aside and there are undoubtedly easy access savings offering a better rate on cash than 0.50%.

Investing in other areas such as stocks and shares could give you more of a return on your money. But remember those investments can go down as well and HMRC won’t have any sympathy if they do.

Tip 14 – Set up a pension for your children

I’ve spoken about putting money aside for your own pension but what about your children? Did you know you can contribute £2,880 a year and start a private pension for your children? The government will top that up by 20% with tax relief, making the total £3,600 going into your children’s pot.

Starting a pension so young can potentially be incredibly beneficial due to the power of compounding. As ever, get proper financial advice on this before moving ahead.

Tip 15 – Buying your first home? Try a LISA

Do you how about LISAs? Lifetime ISAs as these are known are lovely little tools to get the government to prop up your savings by a whopping 25% each year. If you put aside £4,000 each year the government will add in 25% on top, bringing your pot to £5,000.

You can hold either cash or stocks and shares in these as well. And after you’ve brought your house, you can continue earning this way to build up a pension pot. But do speak to a Financial Advisor just in case there may be better alternatives for you out there. Some company pension schemes for example are worth more than saving this way. Be mindful that Lifetime ISAs count towards your ISA annual allowance of £20,000.

Tip 16 – Make some super deductions

If you’re going to buy some big treats to supercharge your business, now is the time. You can get some very generous capital allowances now through the Super Deduction that was announced in March. Here you can get 130% enhanced allowance on certain qualifying new plant and machinery purchased between now and 31st March 2023.

This means companies can cut their tax bill by 25p for every £1 they invest. Plant and machinery can include things such as office chairs and desks, computers, servers, solar panels, tools such as ladders, drills and cranes, electric vehicle charging points and even tractors, lorries and vans. The only catch is the asset has to be brand new when you buy it.

That’s it for these eight tips. Look out next week for the final instalment.

Ready to start the journey?

To get help with your accounts and start freeing up your time to focus on growth, talk to the Mayflower team today.

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