24 Tips and Treats to Help You and Your Business – Part 3

by | Jan 28, 2022 | Uncategorized

The last part in our series to help your business thrive is here. Find out the final eight below.

Tip 17 – Give a gift to your loved ones to reduce your Inheritance Tax

You can give a gift to your loved ones whilst also making the most of your annual exemption for Inheritance Tax. Did you know you can gift up to £3,000 in one tax year to one or several people and keep that amount outside of your estate?

Inheritance Tax can provide a nasty sting if it’s not managed now, and this is a nice, simple way to gift funds away and not have it classed as part of your estate. And guess what – you can carry forward unused allowances by one year!

Just keep a track of your gifts so your executor can make sure you don’t get stung.

Tip 18 – Drive an electric car

Driving an electric car can give you a thousand pounds worth of tax relief.

If you want to save a lot on tax, a company car never usually was the way to go. Bad capital allowances and a horrid P11D meant quite a few people were happy when they were rid of them. But electric vehicles have great benefits in kind – 1% at the moment, going up to 2% next year but fixed for a number of years.

Then there’s the fuel benefit. Because electric isn’t classed as a fuel, it is exactly zero at the moment. Finally, there are those capital allowances. Brand new cars can get first-year allowances of a whopping 100% so you’ll see the savings on your company tax bill.

Tip 19 – Review your payment on account

For those with tax returns, payments on accounts can add a real stinger to your 31st January tax bill. But you can elect to reduce your payment on account if you believe you have good reason to do so!

The catch here is that you believe that when your next tax return is due, your taxes will be lower than what your payment on accounts suggest. It could be you have disposed of a house and have less property income or will expect less dividends next year.

But be careful – if you end up paying that amount of tax or more, HMRC may charge you extra interest which could potentially increase your tax bill.

Tip 20 – Employ the family

Most businesses start out as family-run businesses, so why not bring in the family to help? Hiring your spouse or even children if over 16 could help save a lot of tax for your business.

You need to make sure you’re not just simply paying them a salary. They have to be doing work for that money. Remuneration has to be reasonable as well. If you pay your children £200 per hour for deliveries, HMRC could challenge it as being excessive.

Tip 21 – Earn over £100k? Avoid the 60% trap

Did you know for every £2 over £100,000 you earn, you lose £1 of your personal allowance? This means more of your income is pulled into the 20% tax bracket, making this effectively a 60% tax bracket.

There are ways you can avoid this. You can make donations to charity which will extend your basic rate band. Or you can put money into your pension. Both of these options mean that £100,000 trigger is pushed further away, depending on how much you donate or deposit away.

Tip 22 – Mobile phones are great in the business

If you have a limited company all staff can take out a mobile phone contract and it is 100% deductible. No benefit in kind for your staff either. Just make sure the contract is in the name of your business and you are limited to one phone per employee.

Tip 23 – Look your best, claim uniform cleaning expenses

A lesser-known tax saving tip is that you can claim up to £60 a year for laundry and uniform upkeep. Certain industries get some extra deductions. For example, plumbers can get up to £120 a year and police officers can get £140 a year. Read EIM32712 for more or speak to us to see if you’re missing out.

Tip 24 – The relevance of relevant life

Relevant life insurance is sadly relevant for us all. But it is a tax saving tip we had to include. Relevant life cover can pay out at death and it’s a benefit you can provide to all of your employees tax free, with no P11D impact.

The amount of cover you need could give your spouse the funds to cover your mortgage for instance. A small benefit with tax benefits that could provide an invaluable gift right when you need it.

We hope you enjoyed our 24 tips and that you found it useful. If you did, make sure to share these last three posts with anyone you think it could help. Remember just using one of these tips could help save on your year-end tax payments. If you need any help implementing these tips, we are here for you. Get in touch with us today to find out how we can make 2022 a great year for tax savings.

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.

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our team.

By submitting your details you agree to receive email marketing from Mayflower Accountancy and have read and understood our Privacy Notice. You can withdraw your consent or change your preferences at any time by emailing us or by clicking the link at the bottom of every email we send you.

You have Successfully Subscribed!