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Time Ticks Away on Tax Planning Opportunities

With the end of the 2010-2011 tax year fast approaching, businesses and individuals still have time to take advantage of various tax planning opportunities.

For example, self-employed traders or private limited companies whose business accounting year ends 31 March 2011 may wish to consider bringing forward payments for significant capital or revenue expenditure they had planned for April 2011 or later in the year.

The payments may need to be funded sooner but tax bills could also be reduced a year earlier. It is also worth remembering that the £100,000 tax-deductible limit for the purchase of items qualifying for the Annual Investment Allowance will be cut to just £25,000 in April 2012, so such a purchase before that date brings other tax advantages.

Another option for reducing tax bills, or increasing loss relief carry backs, is to revalue stock held on the balance sheet at cost, but is now worth less than that, to its current realisable value to reduce trading profits in the current year or increase losses.

The annual limit on pension contributions will fall from £255,000 to £50,000 in April 2011, so there may be scope for topping up contributions for directors or self-employed people before the new limit comes in.

The same applies to individuals and their pension contributions but they may also find it worthwhile to think about issues including making the most of their ISA contributions in the current tax year and maximising the inheritance tax-exempt annual gifts they make.

For more detailed guidance on tax planning issues tailored to individual circumstances, please contact us.