Tax Planning
What is Tax Planning
Tax planning is the minimization of tax liability through the best use of all available allowances, deductions, reliefs, exclusions and exemptions. Tax planning can be separated into two main areas, corporate and personal.
We are here to support you and your business by providing effective tax planning strategies
Some of the Reliefs and allowances available are :
– Savings and dividend allowances
These provide an opportunity for families to structure their savings and dividend income to benefit from these allowances.
Taxpayer | Savings allowance | Dividend Allowance | |
| Allowance | Tax Saving |
|
Basic rate | £1,000 | £200 | £2,000 |
Higher rate | £500 | £200 | £2,000 |
Additional rate | £0 | £0 | £2,000 |
Trading and property allowances
These allowances are designed to exempt modest amounts of income for example from sales on eBay and Amazon and rentals from Airbnb.
Each allowance is £1,000 tax-free.
In addition, rent-a-room relief can be claimed if part of your home is let out. Up to £7,500 can be received tax free.
Marriage allowance
Up to £1,260, 10% of the personal allowance, can be transferred to the spouse/civil partner where one party to the marriage/civil partnership is a basic rate taxpayer, and the other has income below the personal allowance. The reduction in the tax liability for the basic rate taxpayer is up to £252 in the current year.
Reliefs available for employees
As an employee there are a few reliefs that can be claimed in respect of your employment. These include:
- Professional subscriptions
- Working from home allowance
- Business miles travelled in your own vehicle.
- Saving for retirement, making the most of pension contributions
- Pension contributions can be made for your minor and adult children and for grandchildren.
The benefits of making contributions are:
- The pension scheme is able to claim back basic rate tax from HMRC.
- If you are paying tax at a higher rate than 20%, then you will receive additional tax relief.
- You are building a pension pot to use in your retirement or pass to future generations.
Pension Annual Allowance
- From 6 April 2023 the annual allowance for tax relief on pension savings in a registered pension scheme will increase from £40,000 to £60,000.
- The adjusted income limit will increase from £240,000 to £260,000. This means if a member’s adjusted income is over £260,000, their annual allowance in the tax year may be reduced. For every £2 their adjusted income goes over £260,000, their annual allowance for the current tax year will reduce by £1. The minimum reduced annual allowance a member can have from 2023 to 2024 onwards is £10,000. This has been increased from £4,000.
For the tax year 2023 to 2024 onwards, the money purchase annual allowance limit will also increase from £4,000 to £10,000.
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