Insights

We’re gifting tax tips this festive season! Or at least, handy reminders of some of this year’s best tax blogs. To wrap up 2023 for you, we’re sharing ‘12 days of tax tips’. It’s our tribute to all the people at the Treasury and HMRC who conceive of the tax policies we write about each month.

We have curated below some of the government’s most giving tax schemes; opportunities to claim tax relief, reclaim tax paid, and potential ways to postpone paying tax.

Government giveaways for the season of goodwill. Feast your eyes on our selection below:

#1 20% tax credit for some landlords

The deadline for January self-assessment tax returns is just around the corner and as every landlord is only too aware, the days when owning buy-to let property was tax efficient are long gone. Property can still be a good investment though, and if you already have an established portfolio, you may wish to keep it. One way you can still claim some tax relief on rental profits is with a tax credit. Instead of being able to deduct mortgage finance costs, some landlords can claim a 20% tax credit against total income. Here’s how to take advantage of this opportunity:
https://rjp.co.uk/could-you-use-a-tax-credit-to-reduce-your-self-assessment-tax-bill/

#2 Ways to manage the corporation tax increase

Corporation tax increased to 25% in April 2023 for companies with profits of £50,000 or more. It’s not feasible for every company to try and restrict their profit levels to remain taxable at the ‘small profits’ rate of 19% but there are some planning measures director shareholders can consider. Making higher pension contributions is an option, as is making capital investments. Here are some ideas for small companies wishing to manage the corporation tax increase:
https://rjp.co.uk/five-tax-planning-actions-that-smes-should-consider-now/

#3 Take advantage of full expensing

Making capital investments is one good way to reduce company profits and therefore reduce exposure to corporation tax. The amount of tax relief available is at an all time high now, with the extension of ‘full expensing’. This means the full cost of acquiring an asset can be written off in the year of purchase, rather than over multiple periods, therefore increasing the effect of reducing tax liabilities. It’s only available for qualifying assets and for companies. Here’s how you can benefit: https://rjp.co.uk/how-to-navigate-the-new-capital-allowances-rules/

#4 Win-win business exits

An eventual sale of their company is often a key motivator for entrepreneurs, but due to the current economic climate it can be more difficult to secure a buyer at the price you want to sell for. One alternative to finding an external buyer is to sell to employees, and one way to do this is by the creation of an employee ownership trust (EOT). Here’s how EOTs work:
https://rjp.co.uk/could-an-employee-ownership-trust-be-your-exit-strategy/

#5 New rules for R&D tax credits

R&D tax credits have become a tax relief staple within the start-up community and inspired a generation of innovators across all industry sectors. Sadly, the scheme is not quite as generous or flexible as it used to be, but it remains beneficial for qualifying companies. Here’s how the R&D tax relief scheme has altered and what is now available:
https://rjp.co.uk/key-changes-to-rd-tax-relief-schemes/

#6 Classic tax planning for the year end

There are still a few months left in the current tax year, which ends on 5 April 2024. If you have surplus funds, consider some traditional tax planning ideas. Get started early to avoid a last minute panic:
https://rjp.co.uk/ideas-for-proactive-tax-planning-in-the-2023-24-tax-year/

#7 Calculating the best dividend salary combination

Many small company shareholders rely on dividends for their income, but changes to the tax rules have significantly increased dividend taxes. Adding to the current complexity is the way the new rates of corporation tax work. It means that small company shareholders should carefully consider how they remunerate themselves, as our article highlights:
https://rjp.co.uk/when-less-definitely-means-more-navigating-dividends-with-recent-corporation-tax-changes/

#8 Transitioning to the new basis period

The rules governing how accounting periods are structured for sole traders, partnerships and LLPs are changing from the start of the new tax year in April 2024; for the 2024–25 tax year. The current tax year (2023-24) is the ‘transitional year’ and some business owners could find themselves with an unexpected tax bill. This can be mitigated with planning and by utilising overlap relief. Here’s how to access overlap relief: https://rjp.co.uk/getting-overlap-relief-for-basis-period-reform/

#9 A golden ticket for company car owners

Company cars can be quite heavily taxed, and many employees opt for a car allowance instead. Car allowances are classified as income and are subject to NICs (national insurance contributions), adding to the overall costs. Earlier this year we highlighted an interesting opportunity to reclaim some of the national insurance contributions that may have been paid by taxyayers receiving a company car allowance. Here’s how you could potentially qualify for a rebate:
https://rjp.co.uk/could-you-reclaim-nics-paid-out-for-company-car-allowance-payments/

#10 Get your SSE ducks in a row for an exit

An essential piece of tax planning for any group of companies considering a business sale is the application of substantial shareholding exemption. This can make a big difference to the tax liabilities arising. Here’s what to do if you wish to apply for this exemption: https://rjp.co.uk/qualifying-for-substantial-shareholding-exemption/

#11 Just a BADR name for ER

Business asset disposal relief (BADR) is the replacement of entrepreneurs’ relief and, like the R&D tax credits we already highlighted, it used to be a lot more generous. There have been numerous rumours that it would be abolished completely in previous Budgets so at least it still exists. Here’s how BADR works and what you can claim if you sell shares in your company:
https://rjp.co.uk/understanding-business-asset-disposal-relief-badr/

#12 E-vehicle company car bonus charge

Having an electric company car remains tax efficient if you purchase the right type of vehicle and do enough business mileage. What happens when you charge the vehicle overnight at home used to be a grey area, but a rule change has clarified the tax position and made it much more tax advantaged. Here are the tax rules regarding charging a company e-vehicle at home:
https://rjp.co.uk/charging-electric-company-vehicles-at-home-becomes-more-tax-efficient/

We hope you find our 12 days of tax tips review helpful and wish you a very enjoyable holiday over the Christmas and New Year period. If you would like some help taking advantage of any of these opportunities in 2024, please do get in touch, emailing us via partners@rjp.co.uk.