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Accountants in Practice

Tax Planning Tips

By Bob Edwards

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On 6 April 2016:

  • The standard model - low salary and high dividends for small company director/shareholders - will likely yield less return due to the implementation of the new dividend tax.
  • Landlords will lose the 10% wear and tear allowance and will pay up to three times more SDLT when they buy their next investment property.
  • Higher rate taxpayers may be stripped of higher rate tax relief on their contributions.

 And so it goes on... As this article is being written there are less than eight weeks to the 2015-16 terminus.

 Have you contacted all your A and B clients and advised them of the changes afoot? And more importantly, suggested that you meet up to discuss pressing planning issues before the egg timer beeps?

For example:

  • Have you reviewed all your small limited company accounts to see if there are undistributed reserves that could be distributed as dividends before 6 April? If the dividends form part of the basic rate band of the shareholder there will be no additional income taxes to pay. If cash flow is tight, credit the dividends to a loan to be taken when funds are available.
  • Have you advised your landlord clients and prospects to defer any replacement furniture expenditure until after 5 April 2016? In this way the expenditure will likely qualify for the new replacement furniture relief in 2016-17, and the wear and tear claim for 2015-16 will be unaffected.
  • Recommend that acquisitive landlords (and second home buyers) buy rental property before 1 April 2016 to avoid the SDLT hike.
  • Make the most of current and unused past year's pension contribution relief. It may be the last chance that higher rate tax payers will get to claim relief at their highest rate of tax.

These tasks are the tip of the iceberg and clients won't be forgiving if they miss out..."

 Bob has written a number of support packs for practitioners, on the changes to the dividend tax, property tax issues and wider ranging tax planning matters for 2015-16. To get more ideas, to get into action, visit his website at http://landmarkpd.co.uk/marketplace.

Published February 2016