The 2014-15 tax year finishes midnight, 5 April 2015. There are a number of tax planning opportunities that need to be considered before this date. Only a few weeks to go. If you have not already done so we recommend you speak with your professional advisor without delay.

Who should be concerned?

Tax year end planning should be considered by:

• Anyone in business
• Individuals who are paying income tax at the 40% or 45% rate, and
• Individuals with multiple sources of taxable income.

All tax payers in these groups should consider their tax planning options before 6 April 2015.

What should you consider?

It is beyond the scope of this blog posting to cover all the planning issues that may be of benefit. The following list is for general information only. The strategies outlined may or may not benefit your situation as everyone’s circumstances are unique. There is no substitute for a conversation with your tax advisor.

1. High income earners should consider options to reduce their income for tax purposes in 2014-15. For example, if your income exceeds £100,000 you will not only be paying income tax at 40%, but you will suffer a reduction in your personal tax allowance. There are a number of strategies you could consider to avoid this.
2. If you are in business, and your accounting year end coincides with the tax year end, generally 31 March 2015, there are a number of timing issues to consider:

1. Are you planning a significant capital purchase (equipment etc) that would qualify for the 100% write off by claiming under the Annual Investment Allowance? Would the expenditure win you more tax relief by being delayed until after 31 March?
2. In a similar vein, should you defer significant revenue expenditure?

3. If your business is incorporated what is the best way to extract profits in order to minimise corporation tax for your company and income tax for shareholders and directors?

Once the 5 April deadline passes numerous planning opportunities lapse. Please call if you would like to discuss strategies that may benefit your tax position.

Landlords can reduce their tax bill by up to £1,500 a year with the Landlord’s Energy Saving Allowance. Unless extended in the forthcoming budget, this scheme is due to end 5 April 2015.

What you can claim

You can claim Landlord’s Energy Saving Allowance for the costs of buying and installing the following energy-saving products for properties you rent out:

• cavity wall and loft insulation
• solid wall insulation
• draught-proofing
• hot water system insulation
• floor insulation

Owning property abroad

You can claim Landlord’s Energy Saving Allowance for properties you rent out abroad, as long as you pay UK tax on profits from those properties.

Owning more than one property

You can claim a maximum allowance of £1,500 for each house, flat or bedsit you rent out. For example, if you rent out a building that contains 4 flats, you can claim up to £1,500 for each flat.

Owning a property with others

If you own the property with others, you can claim a share of the allowance in one of 2 ways:

• based on the amount of the property you own (e.g. if you own half of the property you can claim up to £750)
• based on the amount of money you spent on the improvements (e.g. if you covered half of the costs, you can claim up to £750)

Owners can claim a maximum £1,500 in total for each property owned.

Installing energy-saving items yourself

If you install the energy-saving items yourself, you can claim Landlord’s Energy Saving Allowance for the costs of buying them, but not for installing them.

What you can’t claim

You can’t claim Landlord’s Energy Saving Allowance on a property if:

• you’re claiming an allowance under the ‘Rent a Room’ scheme
• you’re renting out the property as furnished holiday accommodation

How to apply

Please call our office if you would like more information regarding this scheme.

This relief will help you to defer capital gains tax (CGT) when you give away chargeable assets or if you sell something subject to CGT for less than its market value. The relief is called Gift Hold-Over Relief and could be claimed if you give away business assets (including certain shares) or sell them for less than they are worth to help the buyer.

Gift Hold-Over Relief means:

• you don’t pay Capital Gains Tax when you give away the assets
• the person you give them to pays Capital Gains tax (if any is due) when they sell (or ‘dispose of’) them

Tax isn’t usually payable on gifts to your husband, wife, civil partner or a charity.

Eligibility

The conditions for claiming relief depend on whether you’re giving away business assets or shares.

If you’re giving away business assets you must:

• be a sole trader or business partner, or have at least 5% of shares and voting rights in a company (known as your ‘personal company’)
• use the assets in your business or personal company

You can usually get partial relief if you used the assets only partly for your business.

If you’re giving away shares the shares must be in a company that’s either:

• not listed on any recognised stock exchange
• your personal company

The company’s main activities must be in trading (e.g. providing goods or services) rather than non-trading activities like investment.

Why you need a business plan 

A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts.

 A business plan helps you to:

• clarify your business idea
• spot potential problems
• set out your goals
• measure your progress

You’ll need a business plan if you want to secure investment or a loan from a bank.

It can also help to convince customers, suppliers and potential employees to support you.

Initially, you should aim to convince yourself that your new business idea is feasible. There is no point in approaching your bank or a potential investor, until you have researched and proven that there is a real possibility that you can achieve two key financial objectives:

1. Make a profit after paying all expected costs, your remuneration or drawings and taxation. Retaining profits in your business year on year will gradually make you independent of banks and provide you with the funds to expand.
2. Make a decent return on your investment. You should aim to grow your business by an amount that compensates you for the risks you have taken in starting the business. Most new entrepreneurs invest their own cash and you should ensure that your business plan demonstrates that any retained profits, as a percentage of the net assets of your business, is a decent rate.

Find a business mentor

Learn from the mistakes and successes of others. See if you can strike up a friendship with someone who has been successful in business. Someone who you can test out your business ideas and achieve a measure of objectivity.

Take professional advice

Most accountants will have assisted numerous businesses in starting up their business. When you have all your facts and figures to hand take them to your professional advisor who will help you put the finishing touches: prepare the actual business plan.

From April, people automatically enrolled into a workplace pension will see their charges capped at 0.75%, unless they have chosen a more expensive option. The details are set out in draft regulations laid before Parliament on 4 February 2015.

For an average earner currently paying into a fund with a charge of 1.5%, this new cap could save them around £100,000 over the course of their working life. Over the next decade, the default fund charge cap will transfer around £200 million from the pensions industry to savers.

Minister for Pensions Steve Webb said:

Today is an excellent day for pension savers. It is vital that workplace pension schemes are run in the interests of their members and that their hard-earned savings are not eaten away by excessive charges.

Over 5 million people have now been automatically enrolled into a workplace pension and by 2018 millions more will be saving for the first time, or saving more. This is why we are building a pensions system that these workers can save into with confidence – and not see their money disappear in opaque charging structures.

There is an understandable buzz around what April will bring for those retiring now, with the unprecedented pension freedoms coming in. But these reforms show we are also determined to help the pensioners of tomorrow – people working hard and saving hard for their families’ future.

The next stage of the government’s work to ensure full disclosure of costs and charges throughout the value chain is also set out in the February paper – with the plan to publish a joint call for evidence with the Financial Conduct Authority in spring 2015.

Most of the updated draft regulations will come in to force on 6 April 2015, subject to Parliamentary approval.