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Note: This guide will be updated for the 2014/15 tax year in May.

Tax and Financial Strategies 2013/14

Making the most of your money and achieving your financial goals in a world of complex and ever-changing tax legislation requires careful planning and expert advice.

Through tax and financial planning it may be possible to lower and defer the tax you pay, enabling you to free up cash for business or personal purposes and provide long-term financial security for you and your family.

This guide introduces some of the key areas to consider when planning to maximise your business and personal wealth, although your exact requirements will depend on your individual circumstances. Please contact us for one-to-one advice tailored to your needs.

How to benefit from our services:

Please read those chapters which are relevant to you as soon as possible

  • Take note of the key points arising from this guide, and any action you may wish to consider
  • Contact us to discuss your action points, and to evaluate your long-term financial plans.

We would welcome the opportunity to assist you.

The general effect of the Civil Partnership Act is to treat registered civil partners on a consistent basis with married couples. For the purposes of this guide we have on occasions referred only to spouses.

‘HMRC’ refers to HM Revenue & Customs.

This guide is based on current understanding of legislation and the Government’s proposals at the time of publication and under no circumstances should action be taken without first seeking appropriate professional advice.

Financial planning throughout your lifetime

Proper financial planning plays an essential role in helping you to achieve your lifetime goals and provide long-term financial security for you and your family, throughout your own lifetime and beyond.

After another unsettling year, and with the economy likely to remain sluggish for the foreseeable future, a robust tax and financial planning strategy is vital in order to protect both your business and your personal finances. Despite the current economic climate, steps can still be taken to help preserve your wealth and boost your income, now and in the longer term.

Helping to maximise your business finances…

Effective tax and financial planning is an essential part of good business management.

Your business planning strategy might include the following key areas:

  • Choosing the most appropriate business structure
  • Capitalising on allowances and reliefs
  • Claiming tax deductible expenses
  • Deciding on your year end
  • Reducing your liability to capital gains tax (CGT)
  • Considering the role of family members
  • Strategies for exiting your business when the time comes.

…and safeguarding your personal wealth

The judicious use of tax and financial planning strategies can also have a significant impact on your personal wealth. We can help to ensure that your finances are as tax-efficient as possible, making sure that you are taking advantage of the available allowances and reliefs and that you are paying no more tax than you need to.

Key areas that could form part of your personal financial planning strategy may include:

  • A tax-efficient remuneration package
  • Extracting profit from your business
  • Retirement planning
  • Estate and inheritance tax planning
  • Tax-efficient gifting strategies.

New measures for businesses

The Government has put forward a number of measures with the aim of offering support to businesses in the light of the ongoing economic challenges. Some of the key changes, which are referred to in this guide, are outlined below.

Employee shareholder status

Individuals adopting the new employee shareholder status will be exempt from CGT on the disposal of up to £50,000 of shares acquired under the employee shareholder agreement. In addition, on acquisition of the shares the first £2,000 of share value received by the employee shareholder will not be subject to income tax or national insurance contributions (NICs). These measures will apply to shares received from 1 September 2013, when the new status comes into force.

Tax and tax reliefs

The main rate of corporation tax has been reduced to 23% for 2013/14 and will fall by a further 2% in 2014/15, to reach 21%. In 2015/16 the rate will be reduced once again and amalgamated with the small profits rate, giving a new unified rate of 20%.

New corporation tax reliefs will be introduced for the video games, animation and high-end television industries. These reliefs came into effect on 1 April 2013. The video games tax relief will be introduced following State Aid approval. As these reliefs closely follow the existing Film Tax Relief, HMRC is expanding the existing Film Tax Unit to cover the new creative industry tax reliefs.

From April 2013, a disincorporation relief will also apply for five years. The relief allows a company to transfer goodwill and an interest in land to its shareholders so that no corporation tax charge arises on the transfer. It is available to businesses with total qualifying assets not exceeding £100,000.

Record keeping and accounting

From 6 April 2013 all unincorporated businesses can choose to deduct certain expenses on a flat rate basis.

In addition, a new voluntary cash basis for calculating tax for small businesses is being introduced. The new cash basis will allow eligible self-employed individuals and partnerships to calculate their profits on the basis of the cash that passes through their business. Businesses will be eligible if they have annual receipts of up to £79,000 and they will be able to continue to use the cash basis until receipts reach £158,000.

Businesses in the scheme will generally not need to distinguish between revenue and capital expenditure.

Eligible barristers will be able to choose either to use the new cash basis and simplified expenses or the current accruals basis. The existing cash basis legislation for barristers will be repealed (except for barristers already using it, for the remainder of their qualifying period).

We can help with all of your tax and financial planning needs. For a strategic review of your finances, please contact us.