Company contributions will attract tax relief to the company and create no personal tax charge on you as an individual. They are therefore a very efficient vehicle for extracting profits from the company.
The current Annual Investment Allowance allows businesses to purchase capital assets and claim 100% tax relief in the year of acquisition up to specified limits. Certain other energy efficient assets can also be wholly written off for tax in the year of acquisition in addition to the AIA.
As you know already there can be significant savings by taking out funds by way of dividends rather than salary. There can be other National Insurance savings if assets are rented to the company or there are Directors loans on which interest can be paid. Also, there may be opportunities to utilise your spouse’s personal allowance and basic rate band if not already utilised. You also need to be aware that if your income form the company exceeds £100k then your personal allowance is withdrawn and the effective rate of tax on the income between £100/120k can be 60% so you may want to structure your extraction to avoid this.
If you have any staff members that you feel should be entitled to a bonus, then as long as you acknowledge the point before the end of the year by drawing up a minute, then tax relief can be claimed for the payment in the year end accounts even if the bonus is not actually paid for up to 9 months after the year end.
R & D EXPENDITURE:
If the company has entered in to any Research and development programmes during the year then it may be able enhance this expenditure by 100% for tax relief purposes subject to meeting certain criteria.
ADVANCE PLANNED EXPANSION/DEFER REVENUE:
If you are planning expenditure on repairs/decorating/marketing/redundancy then you may want to consider the timing to ensure tax relief is obtained as soon as possible. In addition, if you are in contracts whereby the recognition of income can be legitimately deferred for accounts purposes, you may be able to defer tax liabilities.
If you have bought or are considering buying a property for the business there may be an opportunity to claim capital allowances on a proportion of the cost depending upon the typical features included within the building. An early review of this may be useful.
If you are considering changing a vehicle it may be prudent to review whether you are running it in the most tax efficient manner in terms of ownership. Often, owning a vehicle (non commercial) personally and charging your company mileage, can be more tax efficient than taking a company vehicle. We have software to check this for you.
Some of these items may not be applicable to you but discussing these before the year end will ensure you do not miss out on opportunities that can help with cashflow and provide effective management of the business. If you would like to receive advice please call or email us at Wrigley Partington.