Ten tax tips for owner managers

Owner managers are uniquely placed to cut their tax bills so as the tax year-end approaches, review your finances to catch the...

Owner managers are uniquely placed to cut their tax bills so as the tax year-end approaches, review your finances to catch the best cash-saving opportunities, writes Geoff Everett.

1. Review your reward package to get the most tax-efficient mix of salary, dividends and bonuses

2. Personal pensions can now be based on pension contributions on earnings from any one of the current or previous five years

3. Cut the year's car tax bill by making extra trips to meet business mileage thresholds of 2,500 and 18,000. (From 6 April exhaust emissions, rather than business miles, will determine car tax for business drivers so consider choosing a "greener" car)

4. Consider bringing forward capital expenditure to accelerate allowances. Remember that 100% first year allowances apply to energy-saving technology and IT for small businesses

5. Think about the timing of the sale of assets subject to capital gains tax (CGT) - delay the sale to delay paying the tax bill and get extra taper tax relief (the exchange of contracts, not completion, counts as the sale date)

6. Maximise spouse's CGT and income tax allowances by transferring shareholdings or other assets to the lower earner

7. Check that IR35 will not affect you, particularly if you have just a few clients

8. Update your will and consider inheritance tax-free gifts (each person can give £3,000 a year without incurring inheritance tax, plus £250 per annum to any number of people, and wedding gifts of £1,000 upwards)

9. Check your tax code for 2002/2003, in particular for company car benefits and children's tax credit

10. Consider giving to charity via quoted shares, loan notes or units in authorised unit trusts, as this can further reduce your tax bill.

Geoff Everett is tax partner at Smith & Williamson www.smith.williamson.co.uk/private/personaltax
This was last published in March 2002

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