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Spend to save company tax before April 6th – Campbell Dallas

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Mark Pryce
Mark Pryce

Business owners have a narrow window up to April 5th 2017 in which to make significant tax savings before new tax rules come into force, according to Mark Pryce, a leading business tax specialist with accountants Campbell Dallas.

The main tax saving opportunities arise from the reductions in corporation tax rates, changes to capital expenditure reliefs and extensive reforms to employee benefits.

“Businesses have four months in which to save tax by taking advantage of current incentives and reliefs” said Mr Pryce. “The key message is ‘Spend to save’, which essentially means business owners investing in these incentives and reliefs now, rather than waiting until the taxes rise on April 6th.

He added: “Businesses with surplus cash have most to gain, but it is important to remember that any tax saving decisions should not jeopardise cash flow, which is the most common reason for trading problems.”

Mark Pryce, a Tax Partner with Campbell Dallas, has outlined some of the main incentives and reliefs:

  • Pensions relief will be hit when corporation tax rates drop to 19 per cent in April, and to 17 per cent in 2020, penalising businesses that make employer pension contributions. Contributions are allowable against corporation tax, so business owners should consider bringing forward company contributions at the current 20% rate. Company directors will want to maximise the limitsfor individuals

  • Electric vehicles and energy efficient infrastructure still qualifies for 100% first year capital allowances - including the cost of installing charging points. Benefit in kind tax on electric vehicles remains at 7 per cent,which is substantially lower than fossil fuel powered vehicles.

  • The popular Business Premises Renovation Allowance, which incentivises the conversion of disused commercial property, finishes in March 2017. This can offer up to 100% relief on qualifying costs and has been instrumental in breathing new life into a wide range of disused buildings across the UK.

  • The Annual Investment Allowance (AIA) continues to offer 100% relief on up to £200k of expenditure - a very attractive tax saving opportunity.

  • R&D Tax credits are to be reviewed – the current regime is very attractive and businesses engaged in R&D should act now to maximise the entitlement.

  • Employee perks are changing – with more tax looming – but locking into arrangements before April 6th can mitigate the rising costs.

    • “Looking ahead, business taxes are broadly rising, and reliefs and incentives are contracting, with some set to disappear completely” said Mr Pryce.

    “Fortunately, Entrepreneurs Relief remains relatively untouched, which is important as it encourages and rewards the creation and growth of new businesses. However, with so many changes in the pipeline business owners should plan ahead this festive season to ensure they are maximising the savings, and minimising the effect of rising tax costs”.

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