Friday March 27, 2009

Dear customer, welcome to issue 1

We've thought long and hard about a newsletter trying to develop something which would complement the relationship we have with our clients and contacts and builds upon the approach we have jointly developed. This is issue one. We hope you enjoy reading it and find it a useful resource for you and your business. It's about giving which we hope you agree fits with our approach to accounting and tax. If you're not sure about any of the hints, tips or advice we will be giving in this and future issues, please feel free to give me a call and I'll do my best to explain everything - and of course, we don't charge for advice given over the phone.

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It's time to check your dividends

We're in the last month of the tax year and irrespective of a company's year end, the shareholders need to consider their own personal tax situation. In addition to your tax free allowance of £6035 and assuming you don't have other income, you can usually draw a little over £31,000 in dividends without having any additional personal tax to pay. Assuming there are sufficient profits within the business, then it would be a good time to draw an additional dividend to use up this allowance in 2008-9. By contrast, if you are about to go over this level in 2008-9, then waiting and taking a dividend after 6th April will add it to the new tax year thus removing it from this year's income. Remember to prepare the relevant set of minutes and tax vouchers to accompany the dividend.

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Sole traders might want to get spending

Most sole traders have their year end as 31st March to coincide with the tax year. This is therefore a good month to buy those items or services which you know you need but might be putting of until April. Buying it this month will mean it can be added to your accounts and therefore lower your tax bill. Changes in the tax treatment of equipment such as PCs, desks, vans, etc (commonly known as assets) means that the tax relief is enhanced in most cases, making these especially good purchases in March compared to April. If your year end is not 31st March, then don't worry, just keep this note aside for the last month of your financial year - it will still apply.

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Last chance for payroll

Owners of limited companies aim to take their tax free allowance of £6035 via payroll, thus saving over £1250 in Corporation Tax per shareholding director compared to taking the same amount via dividends. This tax free allowance is on a use it or lose it basis, it cannot be rolled over to the new tax year. Thus if you are a new business and have not used this tax free allowance elsewhere since last April, now is the time to act to avoid losing this tax benefit. If you're not sure of your situation or are worried there isn't enough cash in the business to fund a £6K+ salary for you, please give me a call - I'd be happy to advise - for free of couse.

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