Year-end tax planning 2016/17
Are you looking to reduce your tax liability or preparing for what’s to come in the new financial year? There are certain things to be aware of whether you're an individual or running a business. We can advise on the planning opportunities available before the end of the tax year. Below we have detailed a few of the options to think about:
Personal Savings Allowance
Are you taking advantage of your personal savings allowance? A tax-free allowance for savings income is available for the current tax year 6 April 2016 to 5 April 2017.
The basic rate taxpayer can receive up to £1,000 of savings income on top of their personal allowance of £11,000. Higher rate taxpayers receive up to £500 but there's no allowance for additional rate taxpayers.
The personal allowance for 2016/17 is £11,000 and will rise to £11,500 for 2017/18. The basic rate threshold will increase to £33,500, meaning including total income the higher rate threshold will be £45,000 for 2017/18.
The Lifetime ISA will be available for people aged between 18 and 40 from April 2017.
Individuals can save up to £4,000 per year and receive a 25% government bonus, that's £1,000 on a saving of £4,000! Funds can be used at any time towards retirement or purchasing a first home.
The corporation tax rate is 20% until 31st March 2017. After that it will reduce to 19%. Tax payments must be made through self-assessment. The deadline to complete this is 9 months and 1 day after the year of your accounting period.
Profit extraction - Salary or Dividend
How you decide to take your income will depend on a number of factors and it's important to seek professional advice before committing to a strategy.
One option is to draw a salary within the personal allowance that preserves entitlement and is below employer/employee national insurance contributions (NICs).
The remaining income can be taken as dividend.
See our blog on Salary or dividend? for further information.
Are you a director of your business, not contributed to a pension and have profit in the business? Perhaps a Pension Contribution would be an option for you.
Salary Sacrifice Schemes
Tax advantages of some salary sacrifice schemes will be abolished from April 2017. Pensions, childcare, cycle to work and ultra-low emission cars will be exempt from the change.
We can help you so that you are prepared for the new tax year. We offer bespoke solutions that can help mitigate some of your liability. Give Ping a ring on 01256 769792 to speak to an adviser or email us at firstname.lastname@example.org.