As the end of the tax year approaches, it’s the perfect time to review your finances and ensure you’re making full use of the allowances available to you. Many individuals and business owners miss out on valuable tax-saving opportunities simply because they’re unaware of what they can claim or how to use them effectively.
At Chapman’s Business Solutions, we work closely with our clients to make sure no opportunity is overlooked. Here’s a practical guide to some of the key allowances you should be considering the following.
Dividend Allowance
If you take income from a limited company, dividends can be a tax-efficient way to pay yourself. However, the tax-free dividend allowance has reduced in recent years, making planning more important than ever.
Using your allowance each year ensures you minimise the tax you pay on profits extracted from your business. It’s also worth considering how dividends are split between spouses or shareholders to maximise overall tax efficiency.
Pension Contributions
Pensions remain one of the most tax-efficient ways to save for the future. Contributions benefit from tax relief and for business owners. Company pension contributions can often be treated as an allowable business expense.
Making use of your annual pension allowance not only helps build long-term financial security but can also significantly reduce your current tax bill. If you haven’t reviewed your pension contributions recently, now is a great time to do so.
Capital Gains Tax Allowance
When you sell assets such as shares, property (that isn’t your main home) or other investments, you may be liable for Capital Gains Tax (CGT). However, you do have an annual tax-free allowance.
Using this allowance each year rather than letting gains build up can reduce your overall tax liability. In some cases, careful timing of disposals or transferring assets between spouses can further improve tax efficiency.
Business Reliefs and Allowances
There are a variety of reliefs available to business owners, however, they are often underused. Some key ones to consider include:
- Annual Investment Allowance (AIA): Claim tax relief on qualifying equipment and machinery purchases.
- Business Asset Disposal Relief: Potentially reduce the rate of CGT when selling all or part of your business.
- R&D Tax Relief: If your business is innovating, you may be able to claim valuable tax credits.
Making the most of these reliefs can have a significant impact on your business’s profitability and cashflow.
Why Planning Ahead Matters
Tax efficiency isn’t something that should be left until the last minute. The most effective strategies are put in place well before the tax year ends, giving you time to act and make informed decisions.
By reviewing your allowances regularly, you can:
- Reduce your overall tax bill
- Improve cashflow
- Plan more effectively for the future.
How We Can Help
Understanding which allowances apply to you and how best to use them can be complex.
That’s where we come in…
At Chapman’s Business Solutions, we provide tailored advice to ensure you’re making the most of every opportunity available, whether you’re an individual, sole trader or a limited company director.
If you’d like to review your position before the tax year ends, get in touch with our team today and we’ll help you put a clear, tax-efficient plan in place.
Give us a call directly on 01775 529345 or drop us an email at office@cbsltd.org to book a time in the diary to make the most of your tax allowances.
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