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5th June 2017
Practical Tax Tips
Claim a tax deduction for the items you use in your business. You may be able to do this even if you bought them before you began trading or if there is mixed use – such as a car for private and business purposes.
Capital allowance scheme (tax deductions you can claim for spending on business equipment) allows 100% of the cost against your profits on the first £200,000 spent on most equipment you buy for the business, except for cars. For large items, committing to buy before your accounts year-end can get you a deduction for the entire cost against profits for that year.
Extract profits from a limited company – consider the options. Pay a small salary up to your personal allowance and the rest as dividends could save tax and NI. Pay your spouse for the work they undertake for your business, depending upon their other income.
The structure of a new or growing business (sole trader, partnership, LLP, limited company) is important from both a commercial and tax perspective.
If you’re married or in a civil partnership, make the most of each personal allowance (£11,500 for 2017/18) and basic rate tax bands (£33,500 for 2017/18). You may wish to transfer income-producing assets (e.g. rental properties, investment portfolios) to a spouse to take advantage of their lower rate of tax.