With the end of the tax year fast approaching on 5 April 2023, there is only a little time left to get your affairs in order and make the most of the tax reliefs and allowances that are available to you.

With many changes on the horizon, our experienced tax team at Benson wood has compiled the following checklist of the key investment and tax planning ideas that you should be considering now.

Dividend taxation: Have you utilised the zero per cent Dividend Tax Band of £2,000? Don’t forget that this relief is being reduced from April 2023 to £1,000, before falling again in April 2024 to just £500.

Corporation Tax: The rate of Corporation Tax is currently 19 per cent. However, this will increase from April 2023 for companies with profits of more than £50,000 to as much as 25 per cent for businesses with profits exceeding £250,000. Businesses with profits between these thresholds will benefit from marginal rate relief to reduce their effective rate of Corporation Tax.

Carry Forward: Given the changes, you may also want to carry forward losses into the new tax year to reduce your overall levels of profitability. If you face a higher rate of tax, you could, for example, increase your pension contributions or fund the purchase of a company car so that your profits remain below £50,000. You may also wish to consider whether it will still be tax-efficient to run your business as a corporate body.

Accounting dates: Did you know if your accounting year is different to the tax year you will need to transition next year which will most likely result in additional tax. Are you ready? you can offset your overlap profit and it may be worth considering any planned expenditure in the transitional year 2023/24.

Capital Gains: Have you used your annual exemption for 2022-23 of £12,300? Be aware that the annual exemption is being more than halved to £6,000 from April 2023, and then reduced further to £ 3,000 from April 2024.

Capital Allowances: Have you purchased any required items before your business year-end to ensure these allowances are available a year earlier? The Annual Investment Allowance will now remain at £1 million, so you should make sure you make use of this and the other capital allowance schemes.

It might be worth deferring eligible expenditure into the next tax year, so you can reduce taxable profits after the Corporation Tax rates increase in April 2023.

Super Deduction: The Super Deduction allows companies to benefit from 130 per cent first-year relief on qualifying main rate plant and machinery investments made by 31 March 2023.

Have you fully utilised this tax allowance in the current tax year? This means that investments in assets such as certain commercial vehicles, office furniture or solar panels will allow businesses to deduct the value of the investment, plus 30 per cent from their taxable profits.

Be aware, however, that if your year-end spans 31 March 2023 transitional rules will apply and you must apportion the additional 30 per cent uplift on the number of days in the company’s accounting period before 1 April 2023.

Research & Development tax credits: Have you claimed for all your eligible R&D projects to take advantage of the significant benefits available?

Under the SME scheme, HMRC will allow an extra 130 per cent of identified costs to be written off against taxable profits on projects that have led to the creation of new products, processes or services or modifying an existing product, process or service.

Claims can even be made against innovations that resulted in a loss. Be aware that from April 2023, the additional R&D tax reduction will be reduced to 86 per cent, while the tax credit for loss-making companies will also be reduced from 14.5 per cent to 10 per cent. It might, therefore, be beneficial to bring eligible R&D expenditure forward.

Directors Loans: Have you used the tax-free interest amount on any loans to your business? Depending on your income level, you could save up to £1,000. Take note that the interest allowance is reduced from £1,000 to £500 in 2023.

Personal Tax Brackets: Do you know which income tax bracket you earnings sit within? If you have a standard Personal Allowance of £12,570, the table displays the Income Tax rates you will be charged in each band for the period of 2022 to 2023 in Scotland.

Remember, you are not entitled to the Personal Allowance if you earn more than £125,140 a year.

Inheritance Tax (IHT): This must be paid on the value of any estate above £325,000. However certain assets including business and agricultural as well as shares in private trading companies may qualify for 100 per cent relief from IHT.

The Resident Nil Rate Band (RNRB) was introduced in 2017 and applies to a residence passed, on death, to a direct descendant. It was introduced in stages – £150,000 initially, rising to £175,000 (2020). There is now a nil rate band of £325,000 plus RNRB of £175,000, – which, in total, provides an IHT allowance of £500,000 per person, so a married couple could have a £1 million allowance, where any unused allowance is passed to the surviving spouse.

Estates worth over £2 million will start to lose the RNRB, with it being withdrawn at a rate of £1 for every £2 over £2 million.

Charitable and personal gifts: If you leave at least 10 per cent of your net estate to charity a reduced rate of 36 per cent rather than 40 per cent applies and could save your family money. Gifts to a spouse can be made now to use up his or her nil rate band and could help you to reduce the value of the part of your estate above the £325,000 band.

You can also make regular gifts out of your income which is tax-free if they are used for normal expenditure, which could include, for example, paying for a grandchild’s school fees. Other gifts may be free of IHT, but it is important to seek advice first.

Need help with tax planning?

Don’t let the tax season catch you off guard! Get ahead of the game and secure your financial future by taking advantage of our tax planning services before the year-end deadline on 5 April.

Whether you’re an individual or a business owner, our expert advisors are here to guide you through the complexities of the tax code and help you make informed decisions that will save you money in the long run.

So why wait? Contact us today and let’s start planning for a brighter financial future together!