Chartered Accountants of Poynton, Cheshire

Pension Payments

There have been considerable changes to the pension contribution rules over the last couple of years.

In summary, these are as follows:

• Any individual can make payments of £3600 per annum gross of tax, whether they have an income or not.

• If an employer makes a contribution on behalf of an employee, this will be tax deductible in that employer's accounts as long as the payment is made 'wholly and exclusively1 for the purposes of the trade.

• The maximum any individual can pay in any pension payment period (which is usually the same as the tax year) is normally £21,5000 and any contributions over this will be subject to income tax of 40%. There are some exceptions to this rule.

• There is no longer a provision which allows excessive personal pension contributions to be carried back to the prior year. Some special rules remain in place for retirement annuity contributions.

Edward Appleton: "You can make huge tax savings which can transform your life, when you know how."

Ralph Ellerton: "Appletons live and breathe the paperwork so you don't have to!"

Tax Returns
If you submit your tax details to us, we can advise you of your exact tax liability.

Paying less tax - deductions and deferrals

There are many ways to save tax - all of them perfectly legal. Here's a few to think about...

Create a tax shelter investment

Tax can be effectively deferred by investment in Enterprise Investment Scheme shares, Venture Capital Trust shares (both subject to limits), or in film finance partnerships.

Choose a car with lower emissions

Reduce the tax you pay on your company car and on fuel.
Should you consider buying the next car yourself and
claiming reimbursement for business mileage?

Keep your income below the age allowance limit

If you are over 65, are you able to keep your income below the £18,900 limit at which the higher allowances are scaled back?

Defer gains

Realise gains after the end of the tax year, and delay payment of the tax for 12 months. Split sales across the end of the tax year – make use of two years’ annual exemption.

Make an outright gift to your spouse, who can make use of his or her exemption, too. Delaying a sale can also mean more taper relief – so less tax.

Save employers’ NIC

Employee costs may be high, but save employers’ national insurance contributions by rewarding employees through all employee share schemes and pension contributions instead of additional salary or bonuses.

Ensure business borrowings attract tax relief

Funds borrowed for business purposes obtain full tax relief; your mortgage does not!

Appletons can help you to identify ways to make the most of tax-saving opportunities and investments.

We are always pleased to discuss matters with you – contact us today for further information.

 

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