As a business owner you have access to a world of tax planning opportunities

Author - Charlotte Poole-Graham

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As a business owner you have access to a world of tax planning opportunities

As a business owner you have more flexibility on how you decide to manage your finances. This means you can take advantage of a number of tax saving opportunities. Exactly what opportunities are available to you depends on your individual situation. It is imperative that you take good quality financial advice to ensure that your affairs are organised correctly. Examples of some opportunities that may be available to you are:

Let HMRC help pay for your life insurance

Are you a company director? Do you have life insurance in place to protect your family?

If so, you could be paying an unnecessary tax penalty. If you pay for this cover from your own bank account you will be paying from post-tax income, and if you are paying from the business account you will most likely be taxed on the payment as if it were income.

Recent changes in legislation have allowed smaller companies to benefit from arrangements known as ‘relevant life plans’. These can be written on an individual basis so are available to all companies no matter how small.

Relevant life plans are particularly suitable for businesses that do not have enough eligible employees to warrant a group life scheme and for high earning employees and directors who have substantial pension funds and do not want their death-in-service benefits to form part of their Lifetime Allowance.  They can also be used by existing members of group life schemes who want to top-up their benefits but are limited to the amount that can be provided by their current scheme. 

The tax benefits are:

• Payments are made by the company with no benefit-in-kind charge back to you
• No National Insurance implications
• Possible tax relief as a business expense depending on your individual circumstances
• Tax-free benefits to your dependants
• Plan proceeds do not count towards Lifetime Allowance.

Use your business property to fund your retirement

 

If you own or are considering purchasing a commercial property to run your business from you may be able to hold this in a SIPP (self invested personal pension) benefitting from all the tax advantages of a pension.

The rules qualifying commercial property and how it is managed are very specific. If your commercial property meets the necessary criteria, the tax benefits are:

• Placing the property in the SIPP will qualify for tax relief at your marginal rate on contributions up to the higher of your annual earnings or £50,000 per annum
• Whilst in the SIPP the property will be free of CGT (capital gains tax)
• Your company can pay a rent to your SIPP for the use of the property offsetting this as a business expense for tax purposes
• Any rental income generated is received by the pension free of income tax
• The property will also sit outside of your estate for Inheritance Tax purposes

As a business owner you have the opportunity to take advantage of a number of tax saving opportunities. It is important to take good financial advice when doing so to ensure that you meet all the criteria set by HMRC.

The levels and basis of taxation and reliefs from taxation can change at any time.  The value of any tax relief depends on individual circumstances. The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.

Charlotte Poole-Graham represents only St. James's Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group's wealth management products and services, more details of which are set out on the Group's website www.sjp.co.uk/products.