It’s not long until the end of the tax year - what should you be thinking about?
- Have you used your full ISA allowance?
- Are you or your spouse wasting any of your personal allowance?
- If you are a basic rate taxpayer and your spouse is not using their personal allowance, you may be able to claim marriage allowance.
- If your spouse provides bookkeeping or admin services to your locum practice, could you pay them a market rate for the work done?
- Is there any advantage in using a company owned by you and your spouse to provide locum services? (Be cautious about this, and take professional advice before committing yourself)
- Have you considered if you should be claiming child benefit? If the higher earner of a couple living together, married or otherwise, has taxable income of less than £60k, this could be worthwhile. Note that where you have disclaimed the allowance because you expected income to be too high, you are able to backdate your claim.
- Have you recorded your Gift Aid payments? Sometimes the timing of these payments can affect whether you keep or lose your personal allowance.
- If you are planning on buying a computer or tablet or other equipment for business purposes soon – buying before your year-end will give you tax relief a year earlier.
- Are you recording mileage properly to maximise your claim for car use? We’ve worked very closely with NASGP to make sure that the mileage automatically recorded within LocumDeck is correctly categorised to capture all eligible mileage travelling to and between practices.
- If you are considering buying a brand new low emissions car that is used materially for work, buying before the end of the year could give a cash flow advantage. Other car changes probably don’t give big enough savings to worry about when it happens, unless you have very heavy car usage.
- Where you have your own company – have you looked at the optimum balance of dividends vs salary?
- If you are salaried, have you checked your tax code?
- Capital gains tax: are you able to use your annual exemption of £11,300? Carefully timed sales of shares/property etc can help reduce your liability. Are assets owned jointly with your spouse so you can each take advantage of the exemption? If you have made losses in the year already, don’t deliberately create small gains that would be within the annual exemption, or they’ll reduce your losses – leave until the following year if commercially sensible to do so.
- Inheritance Tax reliefs: if you haven’t got enough to give away yet, what about your parents? Small gifts of £250 to any number of individuals, £3000 annual transfer (and the year before if not used), gifts in consideration of marriage, normal expenditure out of income. All these reliefs can add up to sizeable sums over the years. With larger estates, PET’s (potentially exempt transfers – whereby the donor needs to survive 7 years for it to drop out of account) and Trusts can be useful.
- Prepare to collate your year-end records for your accountant, so your tax can be reviewed early in the year to prevent you paying too much tax in July – and to warn you what you will need to pay the following January.
- Student loan: if you are close to repaying your loan, consider whether it is better to pay it off now, or to switch to direct debit payments so that you don’t overpay and then have the hassle of getting it back.
Finally, if you are considering changing your bookkeeping system (to move on to the NASGP LocumDeck system for example) the new tax year is a good time to start.
This article was first published in the February 2018 edition of The Sessional GP magazine.