Tax and Financial Strategies 2017/18
This section contains a comprehensive guide to tax planning strategies for individuals and businesses. Make sure you contact us for information and advice specific to your circumstances.
In times of ongoing uncertainty, proper forward planning remains the best way of ensuring that you are on course to achieve your business and financial goals.
Your business planning strategy
A sound business tax strategy will include such things as:
- making the most of the available incentives, allowances and reliefs
- choosing the most appropriate structure for your business
- claiming tax deductible expenses
- deciding on the best year end date
- minimising your liability to capital gains tax (CGT)
- optimising the roles of family members
- a tax-efficient business exit strategy.
Your personal financial strategy
A good personal tax strategy will focus on helping to ensure that you, your family and your dependents are financially secure in the long term. It will typically include such elements as:
- a tax-efficient remuneration package
- tax-efficient ways to extract profit from your business
- tax-efficient saving and investment strategies
- tax-efficient property investment strategies
- retirement planning strategies
- estate and inheritance tax (IHT) planning
- tax-efficient gifting strategies.
Tax and business measures
The start of the new tax year saw the introduction of a number of significant changes affecting businesses and individuals, some of which are discussed in more detail later in this guide.
The Lifetime ISA
The new Lifetime ISA is now available to any adult under the age of 40. Individuals may deposit up to £4,000 per tax year and receive a 25% bonus from the government on any savings put into the account before their 50th birthday. The tax-free savings and the government bonus can be put towards a deposit for a first home in the UK worth up to £450,000, or to save towards an individual's retirement.
New rules on inheritance tax (IHT)
The new 'residence nil-rate band' (RNRB) now enables a 'family home' to be passed wholly or partially tax-free on death to direct descendants. The amount of relief will be phased in over four years and will initially be £100,000 in 2017/18, rising each year thereafter to reach £175,000 in 2020/21. The RNRB is in addition to an individual's own nil-rate band and any unused nil-rate band may be transferred to a surviving spouse or civil partner.
Property tax relief
The government has introduced a series of changes to property tax relief. Historically, buy-to-let landlords have been granted relief on interest payments against rental income. However, tax relief for landlords is being reduced in a series of stages from April 2017. The relief for finance costs on residential properties is being reduced to the basic rate of income tax, over a period of four years. For 2017/18 the deduction from property income will be restricted to 75% of finance costs, with the remaining 25% available as a basic rate tax reduction and may be capped in certain situations.
Further income tax changes
For 2017/18 the personal allowance has increased to £11,500 and the basic rate limit to £33,500 as planned. However, the Scottish government has exercised its new income tax-setting powers and the basic rate band for income (excluding savings income and dividends) for Scottish resident taxpayers has been set at £31,500.
There have been significant changes to the taxation of dividend income together with the introduction of allowances for savings and dividend income. These changes were introduced from 2016/17, and it is important to make sure you are making the best use of the allowances available.
We can help with all of your tax and financial planning needs. For a strategic review of your finances, and expert advice on taking your business forward, please contact us.