Check out our 'Top Tax Tips' presentation by Ellis & Co Chartered Accountants and Business Advisers
1.
2. Savings & Investments
Individual Savings Accounts (ISA’s)
As title states, only applies to Individuals, not businesses
Cash Isa – current maximum £ 5760 p.a.
Stocks and shares Isa – current maximum £11520 p.a.
No tax to pay on either the Income or Growth
3. Savings & Investments
Stocks and shares ISA – long term savings plan
Should be undertaken for 5 years or if stopped earlier then
balance left for the remaining period to obtain best chance for
growth
Huge number of funds – cheapest are usually trackers which
tend to outperform most “managed funds”
4. Income Tax
Personal Allowance trap
As is well known, there is a nasty tax trap by reference
to the gradual withdrawal of the personal allowance if
taxable income exceeds £100,000.This is via a reduction
of £1 of allowance for every £2 of excess taxable income.
Effective tax rate in this band is 60%
If possible, structure your income so it falls less than
£100K. If more than £100K consider a lump sum pension
5. Pensions
Still very tax efficient
Tax relief when contributions made
Tax free growth prior to retirement
25% tax free pot on retirement
Income drawdown facility enables you to be as tax
efficient as possible
Start now before it is too late – Auto enrolment starts
soon
6. How to earn over £40K with no tax
Tax Planning
Pay small salary of £640 per month – provides for full
credit towards State Pension
Pay dividends of £30300 to cover Basic Rate Threshold
Total Income will be £41450 – No Personal Tax or
National Insurance
Husband and wife who own their own company can take
£82900 without any tax or NI. Corporation tax will have
been paid on profits but only at 20%
7. Should I Incorporate?
Sole Trader
Profits
Income Tax
7,884
Class 4 Nat.Insurance
Class 2 Nat. Insurance
Total Income
£45,000
£
£ 3,189
£ 138
£33,789
8. Should I Incorporate?
Limited Company – 1 Director
Profits
Salary
Taxable Profits
Corporation Tax @ 20%
Available for dividends
Add back Salary
Total Income
Extra Income from Incorporation
3,747
£45,000
£ 7,680
£37,320
£ 7,464
£29,856
£ 7,680
£37,536
£
9. Free holidays !!!
Would you like a FREE HOLIDAY courtesy of The Chancellor of
the Exchequer?
1 week in Tenerife for a family of 2 adults and 2 children with
Thomson Holidays at 4* Hotel £1655 (Riu Arecas Hotel Costa
Adeje)
10. Nursery Voucher Scheme
Childcare vouchers can save many parents with kids aged up
to 15 over £1,000 a year on childcare. Frustratingly it is only
available via employers, but many large and small companies
take part.
The key is they enable you to pay for childcare out of your
PRE-TAX and National Insurance income. While this doesn’t
sound much, the benefit is huge.
11. Nursery Voucher Scheme
Basic rate tax payers (and higher/top rate payers who joined
before 5 April 2011 as long as they don't take a break from the
childcare voucher scheme of more than 12 months) can pay
for up to £243 of childcare with vouchers each month
(£55/week). This is PER PARENT so two working parents could
get £486 a month of vouchers.
12. Nursery Voucher Scheme
From 6 Apr 2011 new joiners paying higher or top rate tax had
their allowance dropped so that all tax payers have roughly
the same maximum tax gain. From April 2013 the limits are:
Basic (20%) Taxpayer. £55/week vouchers, max annual gain
£930.
Higher (40%) Taxpayer. £28/week voucher, max annual gain
£630.
Top (45%) Taxpayer. £25/week voucher, max annual gain
£590.
14. Nursery Voucher Scheme
Before and After School Clubs
Holiday Clubs/Camps
Play Schemes
Private Schools
Reception Classes and out of school care at Independent
Schools
15. Nursery Voucher Scheme
The number of children you have doesn't impact this, the
limits are the same whether you've one child or an entire
Brady Bunch.
Vouchers aren't specific to each child and have a long expiry
date, so if you know you're going to have higher childcare
costs during the holidays collect vouchers in advance.
Also many providers will let you backdate vouchers up to six
months, although your child must be born for you to be able
to sign up. Check your individual provider's procedures first.
16. Nursery Voucher Scheme
Admin is relatively simple – Just obtain a pack from one
of the companies who will do it for you (for a fee of
course) and away you go!!
