That means you spend more than half the year working on behalf of the government. From June 25, you’ll start to earn any money for yourself. Geoff Everett, tax director at the accountancy and financial services group Smith & Williamson, reckons you can shave days or possibly weeks off this hypothetical date with effective planning. "Every taxpayer should invest time and effort into ensuring they don’t pay over the odds,” he comments. “Unfortunately you can’t rely on HMRC doing your tax planning for you." Here are his five, top tax tips for owner-managers 1. Assess your reward packageAim for a tax efficient mix of salary, dividends, bonuses and benefits. With respect to share schemes, consider enterprise management incentives and approved share option schemes. These arrangements can prove tax efficient for both employers and staff. 2. Consider further pension contributionsPension schemes represent one of the few government-sponsored tax saving vehicles where significant tax relief is still available. Where the company makes a contribution on behalf of the employee, or the individual makes a net payment to the pension provider, it is now possible to receive tax relief on an amount equal to earnings (subject to a cap of £245,000 for 2009/10). Furthermore, where an employee agrees to sacrifice a portion of salary in exchange for an employer making an equivalent employer pension contribution, there can be NIC savings for both employee and employer. However, additional care is required for high earners considering additional pension contributions before 6 April 2011 over and above their usual monthly contributions (whether personal or employer paid). Anti-forestalling rules introduced in 2009’s Budget could mean that additional contributions result in a tax charge on the employee. “High earners” here refer to those with total income of £150,000 or more in the current tax year, or in one of the previous two tax years. 3. Maximise tax breaks on capital expenditure Capital allowance claims permit the taxpayer to offset certain capital expenditure against their business income. These include, among others, the annual investment allowance and enhanced capital allowances for qualifying energy and water-efficient expenditure, which are relevant for both corporate and unincorporated businesses. There is an additional temporary 40 per cent rate of first-year allowance available to all businesses for expenditure incurred on plant or machinery in the 12 months from 1 April, 2009. 4. Review loss-relief claimsAn extended loss-relief facility was announced in November 2008 allowing businesses to carry back trade loss relief of up to £50,000 for up to three years instead of the usual one-year limit. The 2009 Budget announced an extension to this relief, to cover an additional £50,000 of trade losses incurred in the year following that announced in November 2008. 5. Furnished holiday letting propertiesOverseas furnished holiday letting properties located outside the UK, but within the European Economic Area, can qualify for the furnished holiday lettings regime. This treats the furnished holiday lettings business as a trade rather than an investment activity, with favourable capital allowance, loss relief and capital gains consequences. A review of this area by corporates and individuals is imperative as the regime is to be withdrawn from April 2010. Additionally, all claims for previous periods where claims can be amended have to be submitted by 31 July 2009.
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