It pays to be ahead of the game on tax law, says Nick Braun in Business Tax Saver. Changes in the offing include child benefit, which is to be scrapped from 2013 for families with at least one higher-rate taxpayer; and the annual investment allowance, which is being reduced from £100,000 per year to £25,000 in April 2012.
The child benefit cut would cost couples with two children around £1,750 a year, so try to reduce your taxable income, even if just for a year or two. Company owners could “take a bigger dividend in 2011 and 2012 and a smaller one in 2013”, or postpone pension contributions and other tax-deductible spending until 2013. Income splitting may help: eg, “transferring shares or properties to a spouse, to ensure there are no higher-rate taxpayers in the home”. Lastly, use the annual investment allowance, a relief that provides a 100% tax deduction for spending on ‘plant and machinery’. If you need to buy vans or computers, for instance, do so now, before the limit is reduced. You could save thousands of pounds.