| Your small business |
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| 1 | Are you sure that you are taking money out of your business in the most tax-efficient way? Tip: If your business is a limited company it often makes sense to get your money out by a combination of salary, benefits in kind and dividends. The many tax changes made in the last couple of years - including the 2009 Budget - could make this an area well worth looking at again. | | Yes | No | N/A |
| 2 | Are you paying your spouse a tax efficient salary? Tip: The salary must be sensible and reflect the work done. It helps if a contract is in place. | Yes | No | N/A |
| 3 | Have you made the most of your opportunities to save tax by investing in a personal pension? Tip: Pension contributions are tax deductible - which means it may cost you as little as 60p to invest £1 in a pension. If you don't provide for your retirement, who else will? | Yes | No | N/A |
| 4 | Have you reviewed your pension arrangements? Tip: The 1997 Budget cut pension fund income by 20%. That probably means a smaller pension unless you start to increase your contributions. So the sooner you start, the better. | Yes | No | N/A |
| 5 | If you are a sole trader, have you considered taking your partner into partnership? | Yes | No | N/A |
| 6 | If you are already in a partnership, have you considered whether there are any tax (or other) benefits from converting partnership loans and/or surpluses into personal loans - or vice versa? | Yes | No | N/A |
| 7 | Have you considered the legitimate ways to increase or decrease your business profits so that your allowances and tax rates are used as efficiently as possible? Tip: There are severe penalities for artificial transactions, but there are still some practical and legitimate steps you can take. | Yes | No | N/A |
| 8 | If you are about to invest in a new car, computer or any other business equipment, have you considered the best time to buy them and the best way to pay for them? Tip: You will get tax relief a lot quicker if you make the investment shortly before rather than shortly after your business year-end. Please make sure that you make full use of the Annual Investment Allowance | Yes | No | N/A |
| 9 | If your business has made losses in the past, have you made sure that those losses are being used to reduce your current tax bills by as much as possible? | Yes | No | N/A |
| 10 | If on the other hand, your sole reader or partnership business is making profits, have you considered whether you could save tax by transferring the business to a limited company? Tip: Changes in the recent Budget could make becoming a limited company much more attractive than ever before. | Yes | No | N/A |
| 11 | If you run a very profitable limited company, have you done everything possible to make sure that your profits are taxed at 21% rather than the marginal rates.
| Yes | No | N/A |
| 12 | | Yes | No | N/A |
| 13 | If you run a one man band limited company, have you taken appropriate steps to ensure that the IR35 rules won't cost you a fortune in additional tax? | Yes | No | N/A |
| 14 | If you run a one-man band business (not a limited company), have you made sure that there is absolutely no possibility of the the taxman charging you much more money by treating you as being employed by one or more of your best customers? Tip: You may firmly believe you are self employed. But the taxman may think differently. And it could cost you a lot of money. So we strongly recommend you take some good advice. | Yes | No | N/A |
| 15 | Have you considered recently (in the last 12 months) whether your business would be better off trading as a sole trader, partnership or limited company? Tip: The many changes announced in the last few Budgets have moved the goalposts once again. For many businesses the scales may have tipped in favour of becoming a company. While for a few it may now be better to go back to being a sole trader or parmership. | Yes | No | N/A |
| 16 | Have you planned ahead and taken action to minimise your tax bills when you eventually come to sell the business? Tip: Do you really want the taxman to take up to 40% of everything your business is worth? The amounts involved could be huge. But with proper planning you should be able to keep much more ofyour money in your pocket... and not in the taxman‘s. | Yes | No | N/A |
| 17 | If your business invests in Research and Development (‘R&D’), have you planned how to make the most of the 150% tax break announced in the March 2000 Budget? Tip: From 1 April 2000 companies spending more than £25,000 a year on R&D will get tax relief on 150% of their R&D spend. But there are restrictions. So, to make the most of one of the most generous tax breaks in the UK system, you may need professional help. | Yes | No | N/A |
| 18 | Have you considered making easier use of business gifts as a marketing tool now that the March 2001 Budget made this cheaper? Tip: In the past the cost of business gift was only tax deductible for you if they (a) contained a conspicuous advert for your business, and (b) were NOT food, drink, tobacco or tokens or vouchers exchangeable for goods, and (c) they did not amount to more than £10 per person a year. The March 2001 Budget increased the limit in (c) to £50 — which, for many businesses, makes business gifts worth looking at again. | Yes | No | N/A |
| 19 | If you are not already registered for VAT, do you have a system for making sure that you are still entitled to stay non VAT registered? Tip: From April 2009, if your sales in the previous 12 months are more than £68,000 then you MUST register for VAT immediately. So our advice is to set up a system for monitoring your 12 monthly cumulative sales every single month. | Yes | No | N/A |
| 20 | If your sales are less than £1,35 million a year, are you making VAT much easier and cheaper for your business by making the most of the annual accounting and cash accounting schemes? Tip: in the past you could only use these schemes if your annual sales were less than £300,000-£350,000. Now businesses with sales of up to £1,35 million a year, can take advantage of them. Many businesses find that annual VAT accounting saves them a lot of time, and cash accounting dramatically improves their cashflow. So they are both well worth exploring. (Using annual VAT accounting, you make nine interim payments at monthly intervals, or three quarterly interim payments, throughout the year. You only need to complete one return at the end of the year when you either make a balancing payment or receive a balancing refund. Annual accounting can reduce your paperwork and make it easier to manage your cash flow.) | Yes | No | N/A |
| 21 | If your sales (excluding VAT) are less than £150,000 have you considered switching to the new flat rate VAT accounting scheme? Tip: Under the new flat rate VAT scheme, smaller businesses will not need to keep full records of invoices received and issued. Instead they will be allowed to pay VAT as a flat rate percentage of their sales.
Not only could this new scheme be simpler to administer, but it could also result in you paying less VAT. (" If your VAT taxable turnover is less than £150,000, you could simplify your VAT accounting by calculating your VAT payments as a percentage of your total VAT-inclusive turnover. Although you cannot reclaim VAT on purchases - it is taken into account in calculating the flat rate percentage - the Flat Rate Scheme can reduce the time that you need to spend on accounting for and working out your VAT. Even though you still need to show a VAT amount on each sales invoice, you don't need to record how much VAT you charge on every sale in your accounts. Nor do you need to record the VAT you pay on every purchase. If you register for the Flat Rate Scheme in your first year of VAT registration, you can take advantage of a one per cent reduction in your flat rate percentage. | Yes | No | N/A |
| Your employees (which include YOU if your business is a limited company!) |
| 22 | Do you have a company pension scheme? Are you making the most of pensions as a highly tax efficient way or rewarding and retaining key staff?
The July 1997 Budget made every single pension fund in the country worse off. And that means that your staff will probably end up getting smaller pensions when they retire unless somebody starts making bigger contributions now. Who is the ‘somebody’ going to be? | | Yes | No | N/A |
| 23 | Have you explored how to use pensions to cut your wage bill by up to 21.8%? Tip: Under what are known as "salary sacrifice" schemes, it is possible to save (up to) 21.8% of salary that is normally paid as National Insurance contributions (11% for employees and 12.8% for employers.) These savings can, of course, be shared between you and your staff so that everybody is better off. | Yes | No | N/A |
| 24 | Have you considered using one of the more “exotic” type of pension schemes to give you more control and flexibility and allow you and your staff to build up even bigger nest-eggs? Tip: Some of your options might include an Executive Pension Plan, a Small Self Administered Scheme or an Unapproved Scheme.
Recent Budgets have tightened up the control of some of these schemes. If you have such a scheme already, have you considered what these changes mean for you? | Yes | No | N/A |
| 25 | Do you fully understand how to calculate the tax value of benefits in kind? Tip: Under self assessment it is your responsibility to calculate these tax values and include them on your employees' P11Ds. Many of the calculations are not intuitive and if you get them wrong you could find yourself facing a fine of up to £13,000 per incorrect P11D! | Yes | No | N/A |
| 26 | Have you told the taxman about any changes to your company cars or who uses them? | Yes | No | N/A |
| 27 | If you provide company cars, have you checked in the last year whether you and your employees could be better off by changing your company car and petrol policy? Tip: Recent Budgets have dramatically increased the tax on petrol given to employees for private mileage — so this could be an area well worth looking at again. | Yes | No | N/A |
| 28 | If your employees use their own cars for company business, have you looked at how the new
mileage rules will affect them and the business? Tip: From 6 April 2002 employees who use their own cars on company business will be considerably worse off if those cars are over 2000cc. This is because in the past you were able to pay them up to 63p per mile tax free whereas from April 2002 the most you will be able to pay them tax free is 40p per mile. | Yes | No | N/A |
| 29 | Have you considered providing your employees with new low emission cars? Tip: The tax paid by employees on low emission cars is considerably less than on high emission cars, and for some cars you are able to claim 100% tax relief when you buy certain low emission cars. Note: This 100% relief is much more generous than the
normal 20% capital allowances on standard and high emission cars. | Yes | No | N/A |
| 30 | Are you certain that you make the most of tax-free benefits in kind for your staff?
Some of the possibilities include: - Providing mobile phones (one mobile per employee.)
- Lending computers to staff
- Giving them luncheon vouchers
- Subsidising certain forms of fransport to and from work - including bus fares
- Providing workplace nurseries and créches
- Paying relocation expenses
- Make cash awards for contributions to a staff suggestion scheme
- Allowing staff to use pool cars for business purposes
- Paying staff up to 5p a mile if they use their own car to take fellow employees on the same
business trip - Providing company bicycles
- Paying employees up to 20 a mile when they use their personal bicycles on
business journeys! (or Up to 24p a mile if they use their personal motorbike)
| Yes | No | N/A |
| 31 | If you use contract workers and freelancers, have you made absolutely sure that the taxman has
no grounds for treating them as your employees? Tip: This area can be a real minefield. Many businesses have unexpectedly found themselves with very expensive tax and NI bills for people that they thought were contractors and/or freelancers - but the taxman regarded as employees. | Yes | No | N/A |
| 32 | If any of your employees have been with you for more than 21 years do you know how to reward them with a really special long-service present that is completely tax free for both you and them? This would be called an ex gratia payment but should be recorded properly at the time of payment.
| Yes | No | N/A |
| 33 | Have you looked into whether it is possible to cut your costs and improve your cashflow by paying your PAYE and NI quarterly instead of monthly? | Yes | No | N/A |
| 34 | Have you looked at the possibility of motivating and rewarding your staff by giving them share options? Tip: Many commentators now regard the government Enterprise Management Initiative scheme as a “must“ for small businesses who want to motivate and reward their team. Not only is the scheme very flexible; but the tax and National Insurance savings are very attractive. Tip: Make sure, though, that the shares on offer are a safe investment in the longrun. | Yes | No | N/A |
| 35 | Are you sure that you are staying on the right side of the minimum wage law? - "for workers aged 22 years or more: £5.73 per hour
- for workers aged 18 to 21 inclusive: £4.77 per hour
- for workers aged under 18 (but above compulsory school age): £3.53 per hour."
| Yes | No | N/A |
| 36 | Have you advised your employees to check their 2009/10 PAYE coding to make sure that the details are correct and that they are receiving the correct allowances? And have you done this for your own notice of coding? And now for two reminders for the end of the tax year in April 2010 | Yes | No | N/A |
| 37 | If you have a company pension scheme, have you reminded your staff (and yourself) that their 2009/10 annual allowance for making additional voluntary coniributions (‘AVCs’) must be used by 5 April 2010 or else it will be last forever? Tip: it's usually much more tax-efficient for the company to contribute to a pension scheme rather than the employee. | Yes | No | N/A |
| 38 | Have you asked the inland Revenue for P11D dispensations to reduce your paperwork? | Yes | No | N/A |
| Your family |
| 39 | Have you made a will? Have you updated it recently? Tip: There are many compelling reasons for writing a will. For example, without one it could be up to the courts to decide who will be the guardians of your children and you may also have to pay thousands of pounds in unnecessary tax and legal costs. Why make things even worse for your loved ones? Make a will now! | | Yes | No | N/A |
| 40 | What happens to your family and business if you are ill or die? Do you have life assurance, permanent health insurance and critical illness cover? Have you reviewed your policies recently? Are they still the best policies for you? | Yes | No | N/A |
| 41 | If you give money to charity, have you made sure that the taxman makes your donation even bigger by using, for example, Gift Aid and payroll giving?
| Yes | No | N/A |
| 42 | If you are planning on moving home, have you explored the possibility of taking a business loan instead of a mortgage? Tip: Business loans can get up to 40% tax relief whereas mortgages no longer get any tax relief What this means is that, for a £100,000 loan with 10% interest, the 40% tax relief could save you £4,000 a year - ie saving you £40,000 over the 10 years? What could you buy with that sort of money?! | Yes | No | N/A |
| 43 | Have you considered changing your mortgage? Tip: Most banks and building societies offer big interest rate subsidies to people switching mortgages. They are also making the process of switching easy and cheap. What price are you paying for staying loyal to your current mortgage provider? | Yes | No | N/A |
| 44 | Now that tax relief on mortgages has been abolished, have you considered reducing your mortgage? Tip: If the net interest rate you earn on your savings is less than the interest rate you are paying in your mortgage, then you will save money by using your savings to pay off some or all of your mortgage. | Yes | No | N/A |
| 45 | Have you made full use of the fact that your children can earn over £16,135 a year as income and capital gains - completely tax free? | Yes | No | N/A |
| 46 | If your estate is large have you considered - Taking out an insurance policy that will pay your inheritance tax bills when you die?
- Using lifetime gifts to avoid paying inheritance tax altogether?
Tip: One of the saddest aspects of our job is having to tell families that up to 40% of everything their loved ones worked so hard to build up and earn must be handed over to the taxman. And it's made even sadder by the fact that it is all so unnecessary. The truth is that by acting early enough, most people can prevent the taxman getting a penny. | Yes | No | N/A |
| 47 | If you are intending to pay for private education for your children, have you either taken steps to either put enough money aside to fund it, and/or explored the possible tax breaks to make the money go further? Tip: There are no tax breaks specifically designed to help parents finance their children's education. But if you have other family members (usually grandparents) who want to contribute towards the costs, then there are some very tax efficient ways of making this possible. | Yes | No | N/A |
| Your investments |
| 48 | Have you reviewed your investments to ensure that they are appropriate and performing well?
Are they giving you the right balance of income tax and capital growth? | | Yes | No | N/A |
| 49 | Have you considered investments that give you a tax free return? For example: National Savings CertifIcates, Friendly Societies and ISAs Tip: The March 2009 Budget extended the ISA rules so that you can now invest up to £7,200 a year in a maxi ISA for the next four years. | Yes | No | N/A |
| 50 | If your spouse pays tax at a lower rate than you, have you considered passing some of your investments to them in order to reduce your combined tax bills? | Yes | No | N/A |
| 51 | If some of your investments have done very well and grown in value have you considered whether it is sensible to sell some of them to save yourself even higher tax bills in the future? Tip: Everybody is allowed to make £10,100 in tax free capital gains a year (2009-2010.) But many people waste this tax free allowance and end up paying higher tax bills later. Don't join them! "Bed and breakfasting” investments is no longer possible. But you may still be able to save tax by selling shares and buying them back more than 30 days later. Although you will, of course, be taking a risk that the price of those shares may have gone up in the meantime! | Yes | No | N/A |
| 52 | Have you made sure that the non tax-payers in your family receive their interest gross - i.e. without their bank or building society deducting tax? | Yes | No | N/A |
| 53 | Have you considered the four main way of getting tax relief on the full cost of your investments and not just on the interest you earn on those investments? Tip: The main examples are pensions, venture capital trusts, investments in enterprise zone properties and investments under the enterprise investment scheme. The last two can be very risky. Never invest more than you can afford to lose and always take professional advice before investing. | Yes | No | N/A |
| 54 | If you are considering investing in property (other than your home), have you considered taking out a loan to finance the purchase? Tip: Even you don't actually need to borrow now, it may still make sense to borrow and use your spare capital for other purposes. The reason for this is that you will get up to 40% tax relief on the interest you pay on the loan - which makes it one of the cheapest ways to borrow money. | Yes | No | N/A |
