Skip to Content

Minimising Tax - Top 10 Ways

Minimising Tax - Top 10 Ways
Wednesday, March 07, 2018

Minimising tax each financial year can be an exhausting endeavour.

 

Each annual Budget typically brings with it a slew of new legislation and increases in general taxation. Most of us grumble about it for a few weeks and then lose interest, choosing instead to plod on as usual, resigned to our fiscal responsibilities and inevitable fates.

 

Then of course there’s the moral debate concerning those who manage to legally reduce their tax liabilities. Yet, as an op-ed Financial Times commenter said under an article on a similar topic, “do you organise your affairs to pay more tax?”

 

The Panthera team have compiled ten ways you can look at minimising your tax liabilities - read on to find out more.

 

Minimising Tax Step One – Review your VAT accounting

 

How does your business conduct its VAT accounting?

 

The total VAT your business must pay or claim back from HMRC is traditionally calculated as the difference between the VAT your business charges its customers, and the VAT your business pays on your own purchases.

 

However, smaller businesses may benefit from the Flat Rate VAT Scheme. Using this scheme, you pay HMRC a fixed rate of VAT, and you get to keep the difference between what you charge your customers and what you pay on your own purchases.

 

To be eligible for this scheme, your VAT turnover must not exceed £150,000, and you’ll need to submit an application to HMRC.

 

It’s important to understand that, even for smaller establishments, being on flat rate VAT will require careful monitoring in order to see if it’s truly beneficial to you. For more information and advice, get in touch with the Panthera team.

 

Minimising Tax Step Two – Plan Business Investments

 

If you time your purchase of capital assets tactfully, you may benefit from deferring major discretionary expenditure such as refurbishment of premises, for example.

 

Usually, investing just before the end of your fiscal year is usually the most advantageous course of action. However, if you expect the next tax year to bring higher tax through increased profit, you may be able to benefit from deferral.

 

Minimising Tax Step Three – Plan Dividends Carefully

 

From April 2018, the dividend allowance falls – quite significantly – from £5,000, to £2,000.

 

This means that for basic rate taxpayers paying themselves a £5,000 dividend, it will cost them £225 in tax from 2018/2019 compared to £0 today. For higher rate taxpayers, the same sum will be subject to £975 tax annually, and for those at the top: £1,143.

 

Minimising Tax Step Four – Use Promoted Tax Breaks!


The government offer several tax break schemes which many aren’t using to their full advantage.

 

If you’re a serious investor, you may find the Enterprise Investment Scheme (EIS) – or its smaller counterpart the Seed Enterprise Investment Scheme – could reduce your tax liabilities if you use the schemes to invest. Though the process is fairly complex, you may be able to benefit from:

 

  • Income Tax Relief
  • Capital Gains Tax Exemption
  • Loss Relief
  • Capital Gains Tax Deferral Relief

 

See the government’s EIS article for more information. 

 

Similarly, the Venture Capital Trust scheme allows qualifying investors to benefit from 30% income tax relief, with no tax payable on dividends.

 

And, if you’re concerned about tax relief on a more personal level, you may wish to look into how you’re contributing to your pension pot. Though the idea can seem unappealing/boring at first, investing in your pension allows you to save money with 40% tax relief now (as long as you’re within both the annual and lifetime allowances) with those savings only subject to basic rate in the future and having the chance to accumulate in value now.

 

Minimising Tax Step Five – Check your Tax Code

 

Though payroll is now automated, there’s always the possibility that your tax code could be incorrect if you’re an employee.

 

If you don’t fill out a self-assessment form every year, you may find that your tax is being calculated incorrectly. You may also want to check for inconsistencies if you:

 

  • Pay tax at the higher rate
  • Have other sources of income
  • Have a company car, or other company benefits
  • Are the director of a company

 

Checking to see if HMRC have your tax code correct could save you substantial amounts of tax.

 

Minimising Tax Step Six – Steer Clear of Company Cars

 

Tax is due on company cars which are privately used – this includes cars used for commuting to and from work. The tax you pay depends on the value the company car has to you individually, which depends on how much it would cost were you to buy it yourself, and the type of fuel it uses.

 

Company cars are costly - there’s no doubt about it. Plus, the rate of tax depends on your personal tax band, which can make them unnecessarily expensive if you’re a higher or additional rate taxpayer.

 

Instead, look at energy efficient vehicles, or even a company van – anything is better.

 

Minimising Tax Step Seven – Use the Entrepreneurs’ Relief Scheme

 

If you’re eligible, the Entrepreneurs Relief Scheme can mean you pay less Capital Gains Tax when you dispose of your business, or parts of it.

 

It also means you only pay tax at 10% on all gains made on permissible assets (up to a lifetime limit of £10,000,000).

 

However, the rules surrounding qualification for this scheme are complex, and for good reason, too – the tax breaks are extremely appealing.

 

The Panthera Team advises clients in advance of Entrepreneurs’ Relief eligibility, to make sure that any planned transactions don’t explode in your face.

 

Minimising Tax Step Eight – Review your Business Structure

 

The existing tax system means that trading in companies is favoured, whereas personal ownership for assets experience the best relief schemes.

 

Your tax liabilities will differ depending on whether you’re a sole-trader, partnership, member of a Limited Liability Partnership, or shareholder in a Limited Company.

 

In some cases, a ‘hybrid’ arrangement – also known as a mixed partnership – may be possible in order to allow for various levels of income to be paid to individuals, while additional funds remain with a member or corporate partner.

 

The Finance Act 2013 made putting together such a structure slightly more difficult than it used to be, though it isn’t impossible as long as you plan cautiously.

 

A simpler option may be to review your current business structure and decide whether moving up a step or reverting to a previous structure would be of greater benefit to you in terms of reducing tax liabilities.

 

Minimising Tax Step Nine – Wills & Inheritance Tax Plans

 

If you don’t have a will – get one. If you do – update it!

 

Passing away without an up-to-date will can make life extremely difficult for those you leave behind. Review yours regularly and always update it as and when major life events occur.

 

Take a look at the government’s page on IHT for more information.

 

Minimising Tax Step Ten – Marriage Means Money

 

If you aim to equalise income as much as possible within a marriage or civil partnership, you could experience substantial tax relief. This is especially beneficial for small business owners, or those whose spouses aren’t using all their allowances.

 

See the government’s Marriage Allowances page for information on Transferable Allowances, and High-Income Child Benefit Charges.

 

Minimising Tax Liabilities with Panthera

 

The Panthera team knows that, sometimes, navigating the world of tax can be daunting, resulting in people simply leaving it alone and hoping for the best.

 

Get in touch today on 01235 768 561 or at enquiries@pantheraaccounting.com for more information and advice on how to legally reduce your tax liabilities.

 

What our clients say

For us, there is nothing better than a happy customer. Here are just a few that let us know how much we mean to them.

Pete Dungey

Simple, efficient and most importantly, hassle-free.

We found Panthera via our search for a Xero expert. We knew the software we wanted to use, and needed a forward-thinking accountancy partner who could get us up and running, and teach us the ropes moving forward. Tory and her team have always been on hand to answer our questions, and help us to grow as a business, particularly during periods of big change, such as becoming VAT registered. They are always on hand to alleviate any concerns and help to keep our records in order, which makes our year-end accounts an absolute breeze! Being based in Bristol, our relationship is entirely email based, alongside one consolidation meeting at year end - this keeps things simple, efficient and most importantly, hassle-free.

Pete Dungey Kaleido Grafik Limited
Anita van Eijndhoven

Talk Our Language

The support and service we receive from Panthera Accounting is very good. Everything from regular meetings, a prompt e mail response and the transition of our Xero software (which we find very pro active indeed) has and is all remarkably efficient. We find Panthera talk our language and make any process as painless and easy as possible.

Anita van Eijndhoven Quidne-IT
Ash & Tim Lane

Panthera brush aside the stereotype of the typical accountant

We got in touch with Panthera Accounting by way of a recommendation; we haven't looked anywhere else since. They are an extremely professional yet relaxed group of people. We were slightly daunted by the idea of accountants but Panthera brushed aside y the stereotypes. They are very understanding when answering any questions we may have. They are completely efficient, offer sound business advice, and are fantastically priced. We will continue to recommend them.

Ash & Tim Lane Starveacre Fencing
Jayne Johnson

An Asset to my Business!

The whole team at Panthera are great! Working with them has been a huge support to my growing business. They help me to understand the numbers I need to know. They give me technology solutions like Xero so that I can process things quickly and have access to my own figures. They are quick to reply, highly knowledgeable, nothing is too much trouble and as well as making sure that everything is compliant and on time, they are enthusiastic, professional and fun to work with.

Jayne Johnson Better People
John Baker

Absolute joy - they provide a first class service on every level

Working with Tory and the team at Panthera is an absolute joy - they provide a first class service on every level; from simple Xero issues through to more complicated tax enquiries, they’re always on-hand to help me get it right. I’m certainly not their biggest customer, but I’m always made to feel like their most important one.

John Baker BKR Solutions
John Castle

Professional and Friendly

I would like to say that Panthera Accounting have helped me with my business accounts for more than 4 years now. They have consistently offered an excellent competitively priced service that works both professionally and in such a friendly way that I would highly recommend them to everyone considering using their services.

John Castle Ilexanna Limited & Birch Castle Homes Limited
Jonathan Morrison

They are always there to answer queries and sort out issues

I had been with Mr Dunn for 20 years when upon his death Panthera took over the business. They now play a bigger part in the running of my business, they do all the stuff that has to be done but I don't like doing ie book keeping, VAT, wages, and returns. They are always there to answer queries and sort out issues and make sure all Tax deadlines are met. Their costs are fair, service is great and I have and would highly recommend them.

Jonathan Morrison Wallingford Builders
Pippa Scott

Professional, friendly and personal service.

Panthera Accounting have gone above and beyond the call of duty to guide and support our Company. They offer a professional, friendly and personal service that can take the stressful and sometimes frightening feelings out of running a business. They have guided us through the working of Xero and have offered “teaching sessions” on the day to day running of the accountancy package. Our only regret is that we didn’t join their team earlier.

Pippa Scott Scott's Commercial Services Limited
Sara Southey

Panthera puts the personal back in to accountancy!

Tory and her team have provided a friendly, approachable and helpful service from the start. They have delivered a quality service, above and beyond anything I could have expected. Panthera, with the help of the Xero package, have taken the stress, strain and confusion out of managing my company and personal accounts. I look forward to working with them for many years to come.

Sara Southey Bluestones Garden Design
Tracey Miller

Panthera are fantastic.

Panthera are fantastic. Always professional, going the extra mile for their clients and delivering superb service. I recommend them all the time to my clients.

Tracey Miller Bigger, Brighter, Bolder BBB

Contact Us

Panthera will use the details that you have entered into this form to communicate with you on the subject of your message, and for no other purpose.
Please see our privacy policy for more details on how we manage your data.

Lets Get Started

Not Currently A Client?

Moving to Panthera is as easy as 1,2,3...

  1. We jump on a quick call to create the perfect service package for your business
  2. You e- sign your terms of engagement
  3. We get your authority to talk to HMRC on your behalf

And that’s it! From contacting your previous accountant, to updating Companies House with your new registered office address, let us handle all of the admin so that you can get on with running your business, safe in the knowledge that everything is going smoothly in the background.

Talk to Us