Hints & Tips

High Income Child Benefit Charge planning 

The income threshold to which this charge applies has recently increased to £60,000 (from £50,000) and it is 'fully taxed' at £80,000 (up from £60,000) so it is worth reviewing your overall income to see if the change can be mitigated. For example, sacrificing salary in return for an additional pension contribution, delaying a year end dividend or making a personal pension contribution are some things to consider. - 17.06.24

Go electric for your company car

There are still some significant tax benefits from purchasing an electric car. These include 100% capital allowances where the electric car is new and unused and very low tax rates for company cars. For the tax benefits, it is well worth a look…. - 17.06.24

Maximise your pension contributions..…utilise your annual allowance

You can contribute up to £60,000 per year (this can be tapered to £10,000 for higher earners) and you can also make additional contributions where you haven’t utilised your allowance in the previous 3 years. This grows in an environment that is free from income tax and CGT and there are IHT benefits too. Just as important though, the Government will also contribute up to 25% of the contribution you make personally and you can further benefit from higher rate tax relief. If your company makes a contribution then you can reduce your corporation tax bill. - 17.06.24

Review your overall directors remuneration package

Over the last 8 years or so, there have been a number of changes to personal and company tax rates and allowances. Are you making the most of these and are you taking your remuneration in the right way? Is it better for your company to pay into a pension or you personally? Does your company owe you money on a directors loan and is it correct for you to charge interest? Are you able to charge a rent for the space that the company utilises? Is the combination of salary and dividend set up in the most efficient way? There are some of the questions you consider in formulating your remuneration plan. - 17.06.24

Buy to let planning

With the changes on buy to let taxation, particularly regarding the mortgage interest restriction, it is now more important than ever to think about the structure and set up of your buy to let portfolio. Ideally, this should be planned as you start on this journey and whether it would now be beneficial to structure this through a limited company, for example; do speak to us as it isn’t just a one size fits all policy.
However, if you have purchased a portfolio personally and/or with your spouse, it would be advisable to review the overall income of both parties. For example, if your spouse is a lower earner and you are a higher earner, it may be possible and sensible to split the income in an unequal share. - 17.06.24

Take advantage of the annual ISA allowance

You can invest up to £20,000 (or £9,000 for Juniors) into an ISA and any growth generated is free from both income tax and capital gains tax. If you utilise this allowance each year over a period of time this can turn into a very healthy sum. - 17.06.24

Obtain professional advice

The UK tax system can be complicated and constantly changing and evolving, particularly as we are in an Election year. These are just a very small election of things to consider. Please feel free to get in touch with us at Mullen Stoker if you would like a free no obligation consultation where we can discuss your situation and how we may be able to help. - 17.06.24

 

These tips were correct at the time of publishing.