Small changes can make big savings for you and your business…!
Good tax planning involves reviewing your overall goals, your current position and the options for getting from A to B. We plan because there are different options and, often, one option will get us a better outcome than the other.
Sometimes, this can be surprisingly straightforward, with some really quite simple things saving the money, which make us wonder why we didn’t review our position years ago!
Take this example.
I recently started looking after a company with four shareholders, two individuals holding the majority with another two individuals holding a small minority. They were clear about the profits they wanted to extract from the business but had been using the same methods for years. It turns out, this has been costing quite a lot more than it needed to!
Both individuals had spouses who they were happy to make outright gifts of shares to. They’d also had the company paying for their private fuel costs which meant they were paying more in income tax than it cost to fill the cars up each year.
By making small tweaks in various places we’ve been able to save the two majority shareholders circa £30,000 a year. Transferring shares to spouses and paying for all private fuel personally will make a huge difference.
It didn’t take long, it just needed some thought and a plan.
Have you been doing the same thing for years? Have you checked what options are available? If not, there could be big savings to be had.
As always in tax, there are plenty of traps which can un-do the hard work so it’s important to plan carefully. For example, if you gift shares to your children to use their tax bands but they’re under 18 then any dividends received on those shares will simply be taxed on you which leaves you back where you started!
That doesn’t mean you can’t do anything but it does mean you need to tread carefully. Often where there is a wider family shareholding already in place it is possible to plan your income more efficiently.
If you’ve not thought about it recently, review your position and see what you could save.
Nathan Sutcliffe is a tax advisor who enjoys the challenge of helping clients achieve their financial goals in as tax efficient ways as possible. He focuses on delivering tax projects for a broad range of clients – from management buy-outs to employee incentives.
Nathan has also gained a reputation with several of the firm’s large motor clients in particular, ensuring that the businesses are utilising all available reliefs and shareholders are able to access long-term value tax efficiently.