July 29 2014 Latest news:
Mary Plant, Wheelers Accountants, Wisbech
Thursday, February 13, 2014
Spring is a time when we typically see a flurry of tax-advice activity.
With the end of the tax year on the horizon, it seems a good time to look at how you can keep your tax bill as low as possible.
Tax is the lifeblood of any state infrastructure and we should, of course, all pay what is due.
However, our tax system is designed to provide each of us with a range of allowances and exemptions and through careful planning, your tax liability can be reduced.
Each individual has a personal income allowance which, for the 2013/14 tax year which ends on 5 April 2014, stands at £9,440 (£10,500 for those over 65).
If either you or your spouse earns less than the personal allowance, it may be worth looking at transferring income-producing investments and savings from you to your spouse or vice versa to minimise the tax due.
The same principle applies if one of you is a basic rate taxpayer and the other pays tax at one of the higher rates.
If you are looking to dispose of assets such as investments, you should also plan carefully to make the most of your Capital Gains Tax (CGT) exemption.
For 2013/14 this stands at £10,900, so any gains you make above this threshold will be liable to tax.
If you have already used up your CGT exemption, it may be worth deferring any future gains until the new tax year – but conversely if you are expecting to exceed the threshold in the new tax year, perhaps you might benefit from bringing forward disposals into the current year.
Business owners should ensure that they have taken advantage of the generous capital allowances available in the current tax year to minimise the tax due on profits.
The purchase of assets such as plant and machinery can attract capital allowances of 100 per cent - i.e. their cost can be written off against taxable profits.
If you have made substantial profits in the current year, it may be advisable to consider planning any imminent capital purchases to minimise your tax position.
• For help in planning your personal or business tax strategies, contact Mary Plant on 01945 582547 or e-mail firstname.lastname@example.org
Alternatively, follow Wheelers on Twitter at @WheelersAccount.