We’re five months away from the end of the tax year, which means there’s still time to adjust your tax planning if necessary. With that in mind, this article suggests some of the areas you might want to check.
Check your salary
It’s worth checking that the salary your limited company pays you still matches up with your strategy and goals. Depending on your strategy you can set your salary at the most appropriate threshold and take the remainder of your income as dividends.
And your dividends
Dividends do not attract a National Insurance charge and the tax rates chargeable are lower than those on other income. In addition to your annual personal allowance for Income Tax the first £1,000 of dividend income is also tax free.
There are conditions that must be met for the payment of dividends:
The company must have enough distributable profits.
Your company must be able to meet its financial obligations after paying the dividend.
The company’s directors must approve any dividend payment.
Do you have any rental income?
Your rental profit will be taxable on your self-assessment. The tax rate is dependent on whether you are a basic, higher or additional rate tax payer. You can take any allowable expenses into account when you calculate your profit, and it’s important to know what you can claim and ensure you have the necessary evidence.
Will you have to make payments on account?
If your personal tax liability is more than £1,000 and less than 80% of all the tax you owe has been paid already (for example through employee PAYE) then you will need to make a payment on account. These are advance payments towards your tax bill, based on last year’s liability.
If a payment on account has not been part of your planning, but you’re approaching the threshold you may need to adjust your strategy to ensure you have the funds available at the appropriate time.
Have you discussed strategy with your accountant?
A good accountant will understand your situation and your business and will work with you to help you achieve your particular goals. It’s a good idea to check in with your accountant while you still have time to make adjustments, to ensure you’re not missing out on opportunities and setting yourself up to pay more tax than necessary.
If you have questions of if we can help in any way, please call our expert team on 01296 468483 or email info@orangegenie.com.