Have you carried out your company Tax planning?

As 5 April approaches, most individuals turn their thoughts to tax planning, but as we have more 31 March year ends, it seems a good time to remind you that most tax planning for companies requires to be completed prior to the year end.

There are not that many opportunities to reduce Corporation Tax these days but the main items that should be considered are:

1. Capital Expenditure

If the business requires new fixed assets, then pre-year end is the time to make the purchase, even if using Hire Purchase Finance. The assets (excluding the majority of cars) still receive 100% annual investment allowance up to a certain limit.

The rules on the capital allowances have changed so advice may be required if material expenditure is being made.

2. Pension Contributions

Companies can make pension contributions on behalf of employees/directors, but this must be paid pre-year end to qualify for a tax deduction in the current year. The rule changes on pensions in recent years making them more flexible on retirement, have made this a very tax efficient tool for owner managed companies and also for retaining key employees.

Due to restrictions on maximum payments, advice should always be taken on pension contributions before these are made.

3. Bonuses

Staff bonuses that are to be paid within 9 months of the year end can be accrued into the accounts and this can reduce the Corporation Tax liability.

All of the above are sensible planning considerations, but all need to be thought about and completed pre-year end to affect the Tax liability.

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