Spring clean your finances
Spring clean your finances
At the start of a New Year people often think of making resolutions to improve their physical and mental health but it is also worth thinking of financial health at this time.
In the period before the end of the tax year on 5 April, you may be considering the usual planning ideas. However, the start of the year is also a good time to think further ahead and make longer term plans.
Consider going electric if you are going to replace a car that you also use for business purposes. Where Capital Allowances can be claimed the relief is accelerated as 100% First Year Allowances are permitted for electric cars. For any business purchases, relief is restricted for personal use. Other benefits also include being exempt from some urban charging zones fees and the business may be eligible for a Workplace Charging Scheme grant.
If you are purchasing an additional property that you will be using as a residence, consider making a main residence election within the time limit. Where you use properties roughly equally, think about which is standing at a larger gain, or you are likely to sell first.
For example, you may wish to help a child on to the property ladder. Parents can retain an element of control over the property by loaning part or all of the purchase funds to the child and taking a lender’s charge over the property (effectively a family mortgage), but the child can benefit from the lower SDLT rates for first time buyers.
Alternatively, you may wish to consider paying into your adult child’s pension fund instead of making an outright gift of cash (this would be against their annual allowance and is not connected to your pension position). They would benefit from the tax relief and the contribution would also reduce their ‘adjusted net income’ for tax purposes – helpful if they have income over £50,000 and the Child Benefit they receive for your grandchildren has to be paid back to HMRC (or if their income is over £100,000 as mentioned above).
For more ideas, read BDO’s guide to personal tax planning or get in touch with our team.
For more information please contact: Juliette Smith or Aimee Winterbone.
In the period before the end of the tax year on 5 April, you may be considering the usual planning ideas. However, the start of the year is also a good time to think further ahead and make longer term plans.
Your business
In the current tax year (ending 5 April 2024) all sole trade / partnership businesses will have their basis period moved to the end of the tax year. Many GP practices will adopt a year-end of 31 March to be coterminous with the NHS year end. If so and, if you are intending on making any purchases this year for your business, they will need to be made before 31 March 2024 for the Capital Allowances to be claimed on your 2023/24 tax return.Consider going electric if you are going to replace a car that you also use for business purposes. Where Capital Allowances can be claimed the relief is accelerated as 100% First Year Allowances are permitted for electric cars. For any business purchases, relief is restricted for personal use. Other benefits also include being exempt from some urban charging zones fees and the business may be eligible for a Workplace Charging Scheme grant.
Your Income
When your income is over £100,000 you lose your entitlement to tax-free childcare as well as your personal allowance being abated. If you reduce your adjusted net income so that it is below £100,000 then you will retain both. This can be achieved by making personal pension contributions out of your private practice earnings (if you are able to within your annual allowance), changing investments into non-taxable forms, or giving income yielding assets to a spouse/civil partner with lower income.Your home
If you are considering selling a residential property during 2024 be aware of your tax position well in advance of making any sale as tax due, if any, needs to be paid within 60 days of completion.If you are purchasing an additional property that you will be using as a residence, consider making a main residence election within the time limit. Where you use properties roughly equally, think about which is standing at a larger gain, or you are likely to sell first.
Family gifts
If you are going to make a large financial gift, it is always important to take expert advice to make sure things will work out as you intend.For example, you may wish to help a child on to the property ladder. Parents can retain an element of control over the property by loaning part or all of the purchase funds to the child and taking a lender’s charge over the property (effectively a family mortgage), but the child can benefit from the lower SDLT rates for first time buyers.
Alternatively, you may wish to consider paying into your adult child’s pension fund instead of making an outright gift of cash (this would be against their annual allowance and is not connected to your pension position). They would benefit from the tax relief and the contribution would also reduce their ‘adjusted net income’ for tax purposes – helpful if they have income over £50,000 and the Child Benefit they receive for your grandchildren has to be paid back to HMRC (or if their income is over £100,000 as mentioned above).
For more ideas, read BDO’s guide to personal tax planning or get in touch with our team.
For more information please contact: Juliette Smith or Aimee Winterbone.