Now you have filed your April 2015 Return (50% will have been filed in January 2016) you only have 2 months left to take action to save tax on your April 2016 tax return.
What should you be doing right now to save tax?
Contribute to your Pension
Transitional rules, for 2015/16 only, mean that there’s an annual allowance of £80,000, although only £40,000 of this can be used between 9 July 2015 and 5 April 2016. You may also have unused annual allowances from the three previous tax years.
These Transitional rules are to align PIP’s (Pension Input Periods) with the Tax Year.
Pensions have huge tax saving advantages
How a family pension scheme will save you tax
Optimise your 2015/16 Salary
You can’t carry forward any unused personal allowances so generally the optimum salary will be £10,600
What is the optimum tax efficient salary 2015-16?
Take Dividends now
When you take dividends has never been more critical due to changes in the Summer Budget 2015, so if you have distributable reserves you might want to take more dividends this tax year.
Dividend tax rates before April 2016
| Tax band | Effective dividend tax rate |
|---|---|
| Basic rate (20%) (and non-taxpayers) | 0% |
| Higher rate (40%) | 25% |
| Additional rate (45%) | 30.56% |
This will change from April 2016, see the table below
Dividend tax rates after April 2016
| Tax band | Effective dividend tax rate |
|---|---|
| Tax Free £5,000 | 0% |
| Basic Rate Tax Payers (20%) | 7.5% |
| Higher Rate Tax Payers (40%) | 32.5% |
| Â Additional Rate Tax Payers (45%) | Â 38.1% |
Capital Gains Tax Allowance
Each year individuals get a capital gains tax allowance, this year its £11,100. If you have capital gains it could worth phasing them to use up the capital gains tax allowance.
Here are some great blogs on how you could transfer a personally owned property or sell shares in a property company to take gains in stages
http://stevejbicknell.com/2014/08/13/how-do-you-give-away-property-in-stages/
http://stevejbicknell.com/2015/08/24/5-reasons-why-you-need-a-property-investment-company/
Other Ideas
- Capital Allowances and the Annual Investment Allowance – buy assets and equipment now and get an immediate tax benefit even if you buy with HP or a loan
- ISA’s – the current year limit is £15,240, use it or lose it
- SEIS, EIS and VCT – invest now and you could save a lot of tax http://stevejbicknell.com/2015/10/09/how-do-you-get-seiseis-advance-approval/
Reblogged this on Business Accountant.