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PKF accountants and business advisers are urging people to begin planning now to make year end tax savings. With the Budget date set for 12 March and the Finance Bill expected by the end of March, there may yet be more bumps along the way but everyone needs to start the process now.
Lisa Macpherson, national director of tax at PKF, says: “This spring is probably the most important ever in terms of getting your tax affairs in order and arranging your finances to save tax. This is a very busy year because many changes to long-established tax rules take effect from 6 April 2008. There are many planning opportunities available in the run up the end of the tax year but it will pay to get things moving now, even if you have to wait until after the Budget before completing the arrangements.
“Business owners will probably be well aware of the potential capital gains tax issues they face but that is not the only issue they should consider before April”.
For business owners, the urgent issues to consider are:
Capital gains of business owners – most business owners are aware that the 10% effective rate of tax on gains from selling your business will rise to 18% on 6 April unless the gain is under £1m and they meet the tests for the new Entrepreneurs relief. However, not all will realise that there are a number of ways to “bank” the 10% rate by making a disposal even if you cannot at present sell your business outright.
Income of family company owners – those owning their own family company will have to consider the new “income shifting rules” where other family members work in the business or receive dividends. If your business is likely to be affected, extracting profits by way of dividends before 6 April is your last chance to allocate the profits around the family tax-efficiently.
Business investment – business owners considering purchasing new plant or machinery should assess whether advancing or delaying expenditure will earn them faster tax relief as many changes to the capital allowances regime take effect from April (1 April for companies, 6 April for unincorporated businesses).
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