Tax Tips - Income Tax

These tips are guidance only and do not constitute specific advice. Detailed professional advice should be taken before action or refraining from action.

Married Couples

Married couples should ensure that all personal allowances are utilised. Investments could be reorganised, sharing income appropriately and reducing tax.

If self employed and your wife/husband assists you in the business some way, perhaps maintaining business records or performing secretarial tasks, then allowances can be utilised by paying a small wage. This would minimise national insurance contributions and reduce the taxable business profits. It is proposed that new legislation may be introduced to enforce the fact that any allocation has to be justifiable. Full documentation and a trail of such expenditure such be maintained.

Children Savings

Children who have savings should receive interest gross, without the deduction of income tax. Inland Revenue form 185 should be completed.

Company Legal Entity

Profitable businesses should give serious consideration as to the vehicle through which trade is conducted. Although, small tax savings may be made by trading via a Limited Company, there are various other factors to take into consideration.

PAYE Tax Code

If you are an employee you should ensure the correct tax code is being operated by your employer, and that the code has been correctly calculated by the HM Revenue & Customs.

Company Cars

Consideration should be given to a cash alternative rather than a company car. You need to ensure that you calculate the cost of having a company car compared with the cost of using your own. You should take into consideration the interest cost of the capital required to buy your own car, the number of business and private miles that you will cover each year, additional cost of business use insurance cover etc.