Inheritance Tax Planning before 6th April 2016
Have you made use of your annual Inheritance Tax (IHT) exemptions? The annual exemption is £3,000 per donor (plus last year’s £3,000 exemption if you did not use it). Also consider making regular gifts out of your income to minimise the growth of your estate that will be liable to IHT. Gifts out of your surplus income are not subject to IHT if properly structured.
Buy new machinery before 6th April?
Those running a business and making up accounts to 5 April should consider buying plant and machinery to take advantage of the Annual Investment Allowance (AIA) of £200,000. The AIA provides a 100% tax write off for equipment used in your business. This tax relief extends to fixtures and fittings within business premises such as electrical, water and heating systems. There is also 100% tax relief if you buy a new car that emits no more than 95g CO2 per kilometre and an increasing number of cars now fall below that limit.
Note that 5 April is not relevant if your business makes up accounts to a date other than 5 April. If your business year end is say 30 June, then you would need to acquire the equipment before that date to get the 100% tax relief.
But delay in replacing furniture in Buy to Lets until after 6th April 2016?
Tax relief for the replacement of furniture, including white goods, is being reinstated where the expenditure is incurred on or after 6 April 2016. This is good news for those landlords renting out properties unfurnished but providing white goods where the tax relief had been withdrawn in 2013
Consider paying Dividends before 6th April 2016
Something that we have mentioned in previous newsletters for those running their own companies is to consider paying dividends before 6 April 2016 when the new system of dividend taxation starts. Although the first £5,000 of dividends will be taxed at 0% from 2016/17, once that has been used up there will be a 7.5% across the board increase in the rate of tax on dividends. Please contact us to arrange a meeting to discuss this further.