A local accountants view

ADDING VALUE – or just ADDING TO FEES!

2010-07-01T04:46:00.000-07:00

I made a comment this week on twitter that we had “Taken on another new client today - previous accountants charges beat by over 50%”. Nothing unusual about this you may think......There are lots of firms competing for business so compete on price and win the work......Well if that is your train of thought it is wrong but I will come to that later.

I (through my twitter account) received a comment or two from within the world of twitter and accountancy that I disagree so strongly with that I felt I had to pen to paper (so to speak).

The gist of the replies was that because our fee for completing this work was 50% less than the previous accountant we were not going to provide a complete service or “add value” and that in order to do a good job for our new client we needed to increase our new client’s fees by 50%

As I said, I disagree with this way of thinking and I will try to explain why.

Firstly, I do not see how anyone can comment on what a service should cost if they do not know the full ins and outs of the service to be provided.

Secondly and most importantly I disagree fundamentally with accountants or any other professional for that matter using any kind of jargon to bamboozle clients and I particularly disagree with trotting out the term “ADDED VALUE SERVICE” as an excuse to increase fees!

These replies got me thinking “What does added value really mean?” The majority of professional firms will use the term (ourselves included) and most will not have a clue what it means to them or their clients. Most will use the phrase because they heard it in a marketing seminar or read it somewhere and will use it because it sounds good in front of clients.

If you complete a Google search of “accountancy adding value” you will come across numerous firms of accountants offering added value services. Some offer to look beyond the basics. Others say that they will offer a personal service and some just say that their service add's value.

As a professional should we not be doing all of this anyway? I think we should.

I believe that we have a duty to our clients to aim to do the best for them. We are being engaged by them as experts and have their total trust. Should they not rest safe in the knowledge that they are getting what they paid for; an expert service from qualified professionals, doing the right thing by them ALL of the time and not just when we see fee earning potential.

Please don’t get me wrong we as professionals are running businesses just like anyone else and need to charge for our services. However our charges should be FAIR.

We don’t use jargon. We don’t bamboozle clients and we don’t charge excessive fees. We just provide a good, honest, professional yet relaxed service aimed at doing the best for our clients. We look beyond the basics as part of our standard service and aim to provide our clients with a personal service that we think is second to none.

It is because of this, because we treat our clients differently from traditional firms, because we respect the fact that each client is different, because we CARE that our clients recommend our services and we are able to convert prospects to clients.

Accountants should go that extra mile as standard and I think we do.

If you would like to see how we can help you please do get in touch.

Tim Pearce
Director

Crump Pearce & Co Ltd
Chartered Certified Accountants
43 Merstow Green
Evesham
WR11 4BB

01386 49999
hello@crumppearce.co.uk

www.crumppearce.co.uk

The views and opinions expressed in this article are not designed to offend nor are they aimed at anyone or any firm in particular.

Tips for reducing your tax bill

2010-06-17T00:54:00.000-07:00

I am often asked by clients and potential clients, what is the best way to reduce my tax bill?

Unfortunately there is no stock answer for this question. Each person and situation will be different and individual circumstances will need to be reviewed in detail before any specific advice can be given.

However, the following 10 points are the items that could easily be reviewed and may help to reduce your tax bill now or in the future.

1. If you are a sole trader paying tax at the higher rates and your spouse or civil partner helps out in your business and is a lower rate taxpayer it may be beneficial to make them a partner in your business. You could then allocate profits to them at a lower rate of tax.

2. If you are a sole trader or a partnership have you looked into the potential tax saving benefits of incorporating your business?

3. If you work at home (including simply writing up your business books) do you make a claim in your business accounts for ‘Use of home’? Even if you do make a claim are you claiming enough?

In most cases business owners or their accountants simply claim a set amount, say £3 per week, however HM Revenue and Customs actually allow you to claim a proportion of the actual expenses of running your home, i.e mortgage interest, gas, electricity, water rates, council tax etc. It is often the case that this method results in a bigger deduction.

4. If you are planning to spend money on capital equipment or plant do you ensure that you time the purchase correctly? For example if you purchase equipment just before your yearend you will bring forward the tax relief claimable on expenditure which will normally be due at 100% of the cost for the first year.

5. If you trade as a limited company have you made sure that you are extracting money from the company in the most tax efficient way. You could look to use dividends to avoid national insurance and often the most tax efficient route is a mixture of a low salary and dividends.

There are other ‘higher level’ extraction methods available such as the use of trusts, LLP partners and pensions.

6. If you operate as a limited company and have a company car, have you looked at whether or not it is better to own the car personally instead? If you own the car personally you will not be taxed on a benefit in kind which is based on the list price of the car when new and the cars CO2 emissions and can claim a mileage allowance for the business miles covered in the car at the approved rate of 40p (first 10,000 miles) or 25p (over 10,000 miles) per mile.

7. If you pay your staff bonuses why not save them up and pay them half yearly or yearly rather than monthly. Doing this can save on employees National Insurances meaning your staff keep more. This is not available for directors.

8. Do you make sure you always have a pre year-end tax planning meeting with your accountant to make sure all necessary action is taken before your year end? After then it will probably be too late.

9. Inheritance tax could be a big drain on your estate. Have you reviewed your will lately? There are a number of tax efficient strategies available to reduce the burden of IHT.

10. Do you take advantage of your ISA investment limit? The income and capital growth on savings in an ISA is tax free.

All of the points mentioned above a totally legal and above board however just implementing one of them could save your hundreds or potentially thousands of pounds in tax.

As a director of Crump Pearce & Co one of my main aims is that our clients do not pay a penny more in tax than they legally have to. I work with my clients to ensure that all available reliefs, claims and deductions have been made and that my clients are fully aware of all of their options at all times.

If you would like to discuss any of the points raised above please do get in touch to arrange a FREE no obligation consultation where we can discuss your individual circumstances and whilst we cannot guarantee to save you any tax we will give it a good go!

The above is provided for guidance only and should not be relied upon in any way without first seeking professional advice. Crump Pearce & Co cannot accept any responsibility for any loss however caused as a result of reading this article.

Tim Pearce FCCA
Director

Crump Pearce & Co Limited
Chartered Certified Accountants

43 Merstow Green
Evesham
Worcestershire
WR11 4BB

01386 49999
hello@crumppearce.co.uk

www.crumppearce.co.uk

If things go wrong! - Why you should have a Shareholders Agreement

2010-06-16T08:34:00.000-07:00

I am currently in the process of advising a group of companies regarding the ‘merger’ of their business and one of the key areas (apart from the tax, legal and accounting considerations) that I have advised they give further thought to is putting in place a formal shareholders agreement.

A Shareholders’ Agreement is a formal document that contains the rules (as agreed by the shareholders) that the shareholders of the company must abide by.

In simple terms a Shareholders’ agreement should provide:
• Individual shareholders with an element of protection
• A basis for dispute resolution
• The procedure for making key decisions
• Details on the individual powers of one, or a group, of shareholders

There is no legal requirement for a shareholders’ agreement to be drawn up however I would suggest that most professionals would agree it is best practice and I would recommend that all companies where there is more than one shareholder, even if the other shareholders are family or friends, have an agreement drawn up.

Unfortunately one size does not fit all and any agreement should be fully tailored to the specific circumstances of the company and the shareholders. This said the following are the key points that you should consider including in your agreement.

• Company Name and Registration Details
• Initial Shareholders Details
• A brief summary of what the business will do
• Remuneration Policy
• Dividend Policy
• Key Decisions
• Non Compete, Non Deal and Non Solicitation
• Shareholder rights
• Right to purchase other shares
• Right to sell other shares (and who to)
• Basis of Valuation of shares
• Provisions should shareholder die
• Shareholder protection

Obviously dependant on circumstances there may be other points that your specific business needs to consider and we suggest that you seek professional advice regarding your individual circumstances.

Putting an agreement in place could save time and money should a disagreement occur and in my opinion is the only sensible option.

The above is provided for guidance only and should not be relied upon in any way without first seeking professional advice. Crump Pearce & Co cannot accept any responsibility for any loss however caused as a result of reading this article.

Tim Pearce FCCA
Director

Crump Pearce & Co Limited
Chartered Certified Accountants

43 Merstow Green
Evesham
Worcestershire
WR11 4BB

01386 49999
hello@crumppearce.co.uk

http://www.crumppearce.co.uk/

Emergency Budget – What will affect you?

2010-06-07T10:29:00.000-07:00

There is a lot of talk in the press at the moment about the new government’s first (emergency) budget which is set for 22 June.

We currently know a little of what to expect (there is a statement on tax within the coalition agreement) however there are still a number of areas where we must ‘expect the unexpected’.

The main area of speculation is Capital Gains Tax (CGT) where it is widely expect the rate will increase from the current rate of 18 per cent (10% after the application of Entrepreneurs Relief) possibly to 40% or even 50%.

It has also been widely tipped in the press that the level at which CGT starts to be paid (currently £10,100) could be cut to £2,000.

Some experts have estimated that it would mean the number of investors forced to pay CGT each year would quadruple to about a million and there is already evidence of second-home owners putting houses on the market in an attempt to avoid the tax. However, there are also suggestions that the tax change could be backdated meaning any sales pre budget would be caught.

Other potential tax changes include:

An increase in the personal allowance from its current level of £6,475. The Liberal Democrats election policy was that this should be increased to £10,000 although it is doubtful that an increase to this level will come in one lump
An increase in the rate of VAT. There is no mention of VAT in the coalition agreement however most economists have hotly tipped an increase
A review of Child Tax Credit and Working Tax Credit

22 June will be an important day and we will keep you posted on any announcements as and when they happen. However anyone who has a second home or other assets we recommend you talk to your accountant or tax adviser as soon as possible.

Tim Pearce FCCA
Director

Crump Pearce & Co Ltd
Chartered Certified Accountants
43 Merstow Green
Evesham
Worcestershire
WR11 4BB

01386 49999
www.crumppearce.co.uk

The information in this article should not be relied on anyway and Crump Pearce & Co Ltd do not accept any liability what so ever for any loss caused as a result of decision made as a result of reading the article. Professional advice should always be sought.

In the name of decency.....

2010-05-11T09:04:00.000-07:00

It has long been recognised that an employee stands little chance in obtaining tax relief on the cost of business clothing unless it is special clothing which fulfils the role of protection. The technical reason for not being able to obtain tax relief is that there is a dual purpose in spending the money – personal as well as business – and furthermore the clothing is suitable to be worn outside of the working environment even though the employee may not wish to do so.

The latest employee to make a claim and lose it at the Tax Tribunal stage is Sian Williams of BBC Breakfast fame. A novel argument made on her behalf was that the clothing expenditure was necessarily incurred for her work because whilst she was prepared to present the programme without wearing any clothes, the BBC would not accept that. Quite apart from the image which comes to mind at breakfast time, this argument received short shrift.

The above article was first published in a e-tax bulletin.

As ever the information provided is for reference only and should not he relied upon in any way. Crump Pearce & Co cannot be held responsible for any loss caused as a result of acting or not on the information included within this blog. Professional advice should always be sought before making any decision.

Tim Pearce FCCA
Director

Crump Pearce & Co Ltd
Chartered Certified Accountants

43 Merstow Green
Evesham
Worcestershire
WR11 4BB

01386 49999
hello@crumppearce.co.uk

www.crumppearce.co.uk

FURNISHED HOLIDAY LETS - Again

2010-05-11T08:56:00.000-07:00

A quick update on the Furnished Holiday Let situation.......

This is a strange story, where political issues have had a direct effect on tax legislation.

The special tax regime applying to holiday lets of furnished accommodation is very advantageous. However, they only applied to UK properties and under the guise that the UK tax-favoured rules may not be compliant with European rules, the intention was to repeal them from 6 April 2010. Indeed, the necessary legislation was in the Finance Bill following the Budget. With the General Election around the corner, the Government had to get the Bill passed in a ridiculously short time (in fact, they allowed a paltry 2 ½ hours’ debate!). Under pressure from the Opposition, the Finance Act received Royal Assent only if the repeal legislation was dropped.

This means that we still have this special tax treatment and it is quite possible that it will remain with us indefinitely. Furthermore, it applies also to non-UK lettings in the EEA as well as in the UK provided the basic requirements are met. This could give some new tax advantages and we will be pleased to discuss the opportunities with you.

As ever the information provided is for reference only and should not he relied upon in any way. Crump Pearce & Co cannot be held responsible for any loss caused as a result of acting or not on the information included within this blog. Professional advice should always be sought before making any decision.

Tim Pearce FCCA
Director

Crump Pearce & Co Ltd
Chartered Certified Accountants

43 Merstow Green
Evesham
Worcestershire
WR11 4BB

01386 49999
hello@crumppearce.co.uk

www.crumppearce.co.uk

Furnished Holiday Lettings – an update!

2010-04-12T05:21:00.000-07:00

Furnished Holiday Lettings - All change (for now)!

The change to the favourable tax treatment of furnished holiday lettings (FHL) has been dropped from the 2010 Finance Bill. The reason – to get the legislation passed in time to dissolve Parliament ready for the general election.

However this is not the end of the story!

Labour finance ministers have stated that should Labour win an outright majority at the election the changes would be re-introduced in the next Finance Bill (which will be produced immediately after the general election).

What is not clear is both the Conservatives view on the changes (i.e what will happen should they win the election) or; when the legislation would become effective if Labour do win the election (i.e will then make a retrospective change, backdating the legislation to 6 April 2010 as was first wanted or will there be a 1 year reprieve for the favourable rules with the changes starting on 6 April 2011).

Those with FHL’s should keep a careful eye on the outcome of the election.

The above is provided as a guide only. Crump Pearce & Co Limited cannot be held responsible for any loss caused as a result of reading this information and professional advice should be sought before any action is taken.

Tim Pearce FCCA
Crump Pearce & Co Ltd

43 Merstow Green
Evesham
Worcs
WR11 4BB
01386 49999

hello@crumppearce.co.uk
http://www.crumppearce.co.uk/

Spouse or Civil Partner Tax Saving

2010-04-06T07:06:00.000-07:00

SAVING TAX BY TRANSFERRING INCOME TO YOUR SPOUSE OR CIVIL PARTNER

This article was written for and included in our March 2010 edition of Business Focus Newsletter.

This has long been an option where your spouse or civil partner is paying income tax at a lower (or higher) rate than you are. With the new top rate of 50% about to come in on income over £150,000 the saving can be greater than ever, and it is an annual tax saving rather than merely one-off.

If assets are owned generating income of, say, £5,000 the tax saving each year could be as much as £2,500 where your spouse has no income at present, or £1,000 if you pay tax at 40% and your spouse is a basic rate taxpayer.

Not surprisingly there is some anti-avoidance legislation which serves to still tax you on the income if the gift is not outright and instead there are some conditions attached or you could benefit from the gift. However, HMRC are relaxed about you receiving an indirect benefit in the following circumstances where you may feel you want to have a degree of protection:

Placing funds into an account with joint beneficial ownership can provide a degree of protection by arranging for withdrawal only if you are a signatory. The income is then taxed 50:50. HMRC accepts this provided it is a straightforward gift.

Converting property from sole into joint ownership is also acceptable provided it is a straightforward gift. The property could be owned 90:10 in favour of you but with the income taxed 50:50.

Crediting the income from the asset transferred into a joint account. This is not likely to be regarded as taxable on you even though you will be receiving some benefit, provided it was not a condition of the gift being made.

Using the income from the asset transferred to meet your family’s household or holiday expenses is also likely to be acceptable with the same proviso.

Where you run a business as a limited company you could pass some shares to your spouse or civil partner and with care the dividends they receive on their shares will be taxed on them rather than you. If you have not already considered this please talk to us for up to date information on this tax saving idea.

The above article is meant as reference only and should not be relied on in any way. Crump Pearce & Co can not be held responsible for any loss made as a result of reading or acting on the information contained within this article.

Crump Pearce & Co Limited
Chartered Certified Accountants

43 Merstow Green
Evesham
Worcs
WR11 4BB

www.crumppearce.co.uk
01386 49999

Company Car and Van Changes

2010-04-01T06:40:00.000-07:00

This article was first published in our April 2010 E-Newsletter

From 6 April 2010 the taxable benefit charged for the use of company cars and fuel for those vehicles is increasing. If you drive a petrol-powered car with CO2 emissions of 160g/km the taxable benefit of driving that car will increase from 20% to 21% of it's list price.

The tax position for those who have free fuel with their vehicles is even worse. The value of the fuel-benefit for all company cars is based on a fixed value which is increasing from £16,900 to £18,000. This value is multiplied by the percentage used to calculate the car benefit. For example the taxable benefit of having free fuel for a petrol car with emissions of 160g/km will increase from £3,380 to £3,780.

Company van drivers are also hit by the rise in the fuel benefit. Currently where free fuel is provided in a company van, and the van is used for some non-business journeys, the driver is taxed on £500 per year for the use of that fuel. From 6 April 2010 the van driver will be taxed on £550 per year for use of the fuel.

You can reduce these high tax charges by switching to a low emissions car. Where the CO2 emissions are 120g/km or less the car benefit for petrol cars is just 10% of the list price, and half that amount where CO2 emissions are 75g/km or less. We could only find one car with emissions in that bottom category: Toyota plug-in Prius, which has an official CO2 emissions rating of only 67g/km.

If your vehicle has zero emissions such as an electric car or van, there is no tax charge at all from 6 April 2010. What's more, when your business buys a new electric vehicle it can write-off the full cost for tax purposes in the year of acquisition.

Crump Pearce & Co
Chartered Certified Accounants

43 Merstow Green
Evesham
Worcs
WR11 4BB

01386 49999
http://www.crumppearce.co.uk/

hello@crumppearce.co.uk

Budget - A Small Businesses View

2010-03-25T01:34:00.000-07:00

Following the budget yesterday I have decided to write a brief article summarising the key points that will impact on our small businesses clients in the short term.

In his speech Mr Darling promised to help small businesses and said he was providing a £2.5bn package for this. His plans include:

• A One year cut in business rates for small businesses. The cut will be effective from October 2010 and is aimed at helping 500,000 small businesses. Eligible small businesses occupying properties with rateable values of up to £6,000 will pay NO business rates and business occupying premises with rateable vales between £6,000 and £12,000 will receive significant reductions in their rates. More information on how this is going to work in practice will be available shortly.

• Doubling the Annual Investment Allowance (AIA) for small businesses from £50,000 to £100,000. This looks great on paper however the reality is that the majority of small businesses will not benefit as they will not incur this much capital expenditure.

• Introducing a 100 per cent first year allowance for new and unused zero-emission goods vehicles a period of five years from April 2010. This will provide a great tax break if the available vehicles are fit for purpose. Additionally commercial vehicles already qualify for the current AIA which in effect provides relief at 100 per cent already.

• Doubling the limit for relief on capital gains tax for entrepreneurs to £2m. This may benefit a serial entrepreneur who builds and sells 'many' businesses but I would suggest will not benefit the majority of businesses as most small businesses would be unlikely to sell for anywhere near the original £1m limit let alone the new £2m limit.

• Extending the business payment support helpline which effectively gives business owners time to pay their taxes without incurring any additional surcharge or penalty.
He also said that Lloyds and RBS (the part state owned banks) would provide additional funding of £94bn to small businesses which is great in principle however the proof will be in the banks carrying out this promise and providing much needed affordable funding to small businesses.

At the end of the day the whole process could be repeated again very soon if the Conservatives gain power at the forthcoming election.

Without a doubt this was a political budget which in reality only delayed the pain. There was some tax breaks for small business in the short term whilst the reality is that in the long term taxes will rise.

The Conservatives have already pounced on the announcement to ‘freeze’ the basic personal allowance at the current rate of £6,475 stating that when inflation is taken into account this announcement effectively creates a ‘stealth tax’ which could cost 30 million tax payers an additional £50 a year.

Also ‘frozen’ was the starting point at which Inheritance Tax is paid and again in the longer term when taking inflation into account this will result it in an increase in the tax take.
There was also an announcement that from 6 April 2011 HMRC will also be able to ask for security payments from business owners before the business is permitted to operate a PAYE scheme. This is an add on to the rules that allow the same for VAT. The Tax Office tends to demand such payments where the business owners have previously been involved in a business that failed owing VAT.

A detailed budget report can be viewed on our website www.crumppearce.co.uk
The above is designed as a guide only and should not be relied on in any way. For a detailed guide of how the budget impacts on you please contact your professional advisor.

Tim Pearce
Director
Crump Pearce & Co

43 Merstow Green
Evesham
WR11 4BB
01386 49999

hello@crumppearce.co.uk

www.crumppearce.co.uk

Planning for success......

2010-03-25T01:29:00.000-07:00

This article was first published on our website in March 2010.

As we move forward in 2010 the most successful and profitable businesses will all have one thing in common, they will all have a plan. These businesses will know where they are, where they are going and will have an idea of what they need to do to get there. They will have targets that they will regularly monitor and reviewed so they can react and implement change if they need to.
At this point you may be thinking:

I haven’t got time to write a formal plan;
or
I don’t need to plan, I am the business and I know what I am doing;
or
We don’t need to have a plan, we are a small family business and are too small for all that formal stuff;
or
A variety of other things that will stop you from sitting down and simply assessing where you are and where you want to be.

My answer to these statements is easy - ‘running a business without a plan is like getting into a car and driving without any idea of your final destination – you just wouldn’t do it’.

A plan should be seen as the ‘roadmap’ for getting to where you want your business to be and should link where you are now to where you want to be in the future. A plan does not have to be too detailed and should not be more than a couple of pages long. In fact some of the best plans are what we would term a ‘one page plan’ which as the name suggests is only one page long.
Getting your key objectives down on paper will help to cement them in your mind. It will also give you a document that you can refer back to and allow you to easily monitor performance and benchmark where you are, to where you wanted to be.

The benefits of making your plan will far out weigh the time costs of actually making the plan. Some of the key benefits are:

1.The ability to monitor progress against targets
2.You can identify potential problems and take appropriate action
3.Improve the decision making process, giving you greater control over your business
4.Improve confidence in making key decisions
5.You and your team can focus on clear targets and objectives and stay on course
6.Improve staff motivation, focus, and accountability
7.Improve overall efficiency

Your plan should include:

1.A brief summary of where you are now
2.A brief summary of your key objectives/targets for the future
3.Brief notes of how you are going to get there

Key points to think about are:

1.Key figures such as turnover, staff costs, staff numbers, gross margin etc
2.New and existing products and services
3.Your market position
4.Your current or new/potential customers
5.Your personal objectives
6.Marketing
7.Competition

In order for your plan to be beneficial your targets and objectives need to be measurable in some way. They also need to be achievable and realistic. You need to be honest with yourself – it will be de-motivational for you and your team to set and not achieve un-realistic targets. Furthermore, you will not be able to react if you cannot measure whether or not you are achieving your targets.

For example, setting the target of having the biggest turnover in the area for your industry is most probably both not realistic and not easily measurable – you can’t easily know what your competitor’s turnover is. However, setting the target of increasing your turnover by 10% over the next 12 months by adding a further 5 key clients to your portfolio is both specific, measurable and can be monitored and easily worked towards.
Your plan should be dynamic and should be reviewed and monitored on a regular basis. This allows you to adapt your strategy and put in place changes where necessary.

In summary if you have a documented plan you and your team will know what you are aiming for, you can monitor performance, track results and make informed decisions that will help you to move your business forward.

If you would like help writing your ‘one page plan’ or would like to discuss how a plan can help you and your business please get in touch.

Tim Pearce (Director)
Crump Pearce & Co Limited
Chartered Certified Accountants

43 Merstow Green
Evesham
Worcs
WR11 4BB

01386 49999
tim@crumppearce.co.uk
www.crumppearce.co.uk

Tax Planning For 2010

2010-03-25T01:27:00.000-07:00

This article was written at the beginning of March 2010 and first published on our website www.crumppearce.co.uk

The end of the 2010 tax year is only 4 weeks away. Now is therefore the ideal time to complete some pre year-end tax planning and also look at some forward planning for 2011.
If you own a business or are self employed some of the planning opportunities that that you should consider are:

1) Have you made full use of your allowance for the purchase of capital equipment? Most businesses receive an ‘Annual Investment Allowance’ each year meaning the first £50,000 of qualifying capital expenditure in the tax year is set fully against ‘profits’ in the year of purchase. Therefore by bringing forward planned capital expenditure you will bring forward the tax relief.

2) If your are likely to make profits from your business this year but have poorly performing shares that could be sold for less then they cost you it may be worth thinking about crystallising the losses on these shares before the end of the tax year. This loss can then be set against the businesses profits.

3) If you operate a limited company have you made use of your tax free personal allowance by paying yourself a salary up to the personal allowance limit?

4) If you operate your business through a company have you reviewed your dividend policy to ensure that you receive your money in the most efficient way? It may be worth looking at transferring some shares in a family company to your spouse. Inter-spouse transfers are exempt from Capital Gains Tax and could result in serious income tax savings.

An additional point to note here is that to minimise the risk of HM Revenue and Customs treating divided payments as salary, and thus attracting a national insurance charge you should ensure that the transaction is correctly recorded in the company’s books and that the appropriate paperwork is in place.

5) Have you reviewed your pension contributions this year to see if there is any scope to make additional contributions? Because of the changes to the top rate of income tax next year the rules on pension contributions are quite complex and proper professional advice should be sought on this subject.

6) If you own a property classified as a ‘Furnished Holiday Letting’ have you looked at how the change in classification to general letting in April 2010 will affect you tax position? It may be worth bringing forward any planned capital expenditure on the property so that the expenditure qualifies for capital allowances.

Additionally the relief that you can claim on any holiday lettings losses will also change.

7) Have you reviewed your company car policy? It may be worth looking at taking your car ‘private’ in 2011 and claiming mileage for the business use of the vehicle at 40pence per mile for the first 10,000 miles and 25pence per mile thereafter.

Tax planning should not just be about business owners or the self employed. There are also planning opportunities that individuals can look at such as:

1) Are you making full use of your tax efficient savings allowances – ISA’s?

2) If you have surplus cash that you would like to pass onto your relatives without affecting your Inheritance Tax Position you can make gifts of up to £3,000 per tax year. If you did not made any gifts last year you can double that amount.

3) If you are a higher rate tax payer and your spouse is a basic or lower rate tax payer and you receive bank interest and/or dividends have you thought about transferring the savings or shares into your spouse’s name so that tax is paid at the lowest cost?

I firmly believe that no one should pay more in tax than they legally have to and reviewing just one or two of the points mentioned above could create significant tax savings.

If you own a business or a self employed to ensure that you are doing all you can to minimise your tax burden you should make sure that you have a pre year-end tax planning meeting with your accountant and ensure that all necessary action is taken before the end of the tax year. After then it will probably be too late.

If you would like a FREE review of your tax affairs please contact the office on 01386 49999 or on hello@crumppearce.co.uk.

Tim Pearce
Director
Crump Pearce & Co Ltd
Chartered Certified Accountants