Quest Duthoit — Chartered Accountants

EQUIPMENT - The year to 31 March 2012 is the last time that full relief applies to £100k of qualifying capital expenditure. This applies to most equipment and even vans and some integrated parts of new buildings. The amount falls to £25k next year. Pro rata calculations apply to some year ends and therefore early planning is recommended.

INCREASED TAXES - The increased taxes from 5/4/10 are now 'biting'. Income tax - £100k - £112k at an effective rate of 60% with the loss of the personal allowance. Above £150k at 50%. Some sole traders and partnerships will be much more tax effective to convert into limited company status. Also, to consider transfer of part of the business or company to the spouse in some cicumstances, allowing them to be taxed at lower rates on part of your income. Best of all, consider making as much as possible in the form of a capital gain which might attract tax at as low as 10% with entrepreneurs relief. 

PENSIONS — The last couple of 'transitory' years have meant that a lot of relatively high earners have been severley restricted in the amount that they can put into pensions and obtain tax relief. From 2011/12 onwards there is a £50k maximum .. but, the unused allowance from the 3 previous years can also be considered which can greatly enhance the contribution. 

RESEARCH AND DEVELOPMENT — This is a great area to save tax that is infrequently used - there is up to 100% additional relief for expenditure that genuinely relates to 'an advancement of science or technology'. If you are unsure whether you might qualify - ask! 

FURNISHED HOLIDAY LETS -  In the right circumstances these can be treated as a business for most categories of tax which gives some great advantages.... but they must be available to let for 210 days and actually let for 105 days.

COMPANY CARS — The capital allowance tax relief received by the company is now only 20% per annum for cars with less than 160g/k. Consider whether leasing may give you earlier tax relief. Cars in excess of 160g/k get 10% but there are leasing restrictions also. Buy a car with less than 110g/k and get 100% relief in the first year - there are some cars in this category and they are certainly very tax efficient! Classic cars more than 15 years old can also be a very 'cheap' benefit.