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Action before 6 April could save tax!


The end of the tax year (5th April 2009) is quickly approaching. Now is a good time to consider tax planning ideas if you want to pay less tax. If you wait too long you could be missing tax saving opportunities.

This edition of ‘PayLessTax’ focuses on some key tax saving opportunities that you may wish to think about before the end of the tax year, although for some it may be preferable to take action after 5th April.

Take money out of your company with no tax


If you own shares in your own company, it is worth ensuring that you maximise the amount of dividends you take before 6th April 2009. Providing your own gross income (including the dividend) remains below the higher rate tax threshold in a tax year (currently £40,835), then there is no further tax to pay on the dividend. Hence if your income is currently below the higher rate threshold and your company is making profits then you could save tax by considering paying a dividend prior to 6th April 2009.

Providing profits are available for the dividend then this can be a tax efficient way of taking monies from the business. You may wish to have the funds personally available, or perhaps prefer to safeguard the cash from future trading difficulties. Alternatively you may prefer to leave the cash in the company, in which case you can still declare the dividend and maximise tax savings.

Care is required to ensure the relevant documentation is completed and approved prior to the payment being made. If your income exceeds the higher rate threshold you can still consider dividends, but you will lose up to a quarter of the payment in tax. Although dividends are quite a cheap way to extract profits from the business, there are other alternatives. We do offer a remuneration review to establish the most tax efficient options for your circumstances. Please contact us if you want to find out more.

Reduce the P11D burden


If you provide employees with benefits or expenses, then you could cut down your workload with an agreement from the Revenue, known as a “dispensation”. Act before 6th April 2009 to save time this year. Please contact us if you would like assistance.