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Where the owners of a business are the shareholders, there is considerable scope for deciding how profits should be taken out of a company.
Business Tax Planning should not be carried out in isolation. Aligning corporate financial planning with individual personal financial planning needs and requirements is essential.
DO consider the timing of dividends and bonuses with regard to the personal tax position of company shareholders (these can be paid up to nine months after the year end).
DO ensure that any pension contributions are paid before the year end.
DO plan to bring forward any capital expenditure into the current accounting period.
DO consider any benefit in bringing your partner/spouse into the business.
DON'T sell assets, such as property or shares that will give rise to a large chargeable gain until after the company’s year end.
DON'T sell assets on which capital allowances have been claimed until after the year end.
DON'T forget the effect on your accounts if you reduce your profits. Your bank manager may wonder if lending to you was such a good idea after all!
DO ensure that any provisions made are against specific costs, not a general estimate.
DO ensure that you value stock and work in progress, taking into account any reduction arising as a result of obsolescence.
These are just some of the Do's and Don'ts of Business Tax Planning. For expert advice on your tax planning strategies, get in touch or call 0845 201 1582.