Farming Talk: Time to consider your tax planning options
Tax planning – Have you considered your options for 2014?
With the Budget on March 19 and the end of 2014 tax year fast approaching, it's time to consider the options which are available to reduce the level of tax which could be payable for the 2014 tax year, as well as for years ahead.
PENSIONS: Pension contributions may enable you to claim tax relief at source and, if you are a higher rate tax payer, you may receive further marginal tax relief.
CAPITAL ALLOWANCES: The annual investment allowance allows for 100 per cent tax relief against the taxable trading profits of a business, for qualifying expenditure.
For a two-year period from January 1, 2013, to December 31, 2014, the AIA has increased to £250,000 per year.
Based on current legislation, the AIA will be reduced down to £25,000 from January 1, 2015.
The AIA may also be available for certain energy capital expenditure on renewable energy.
FIXTURES AND FITTINGS: If you are considering purchasing/selling land and buildings in the short term it will be appropriate to consider the new fixtures and fittings rules prior to April 5, 2014.
INTER-SPOUSE TRANSFERS: Making inter-spouse transfers of income-earning assets may enable you to split income more tax efficiently.
REPAIRS: Repairs to business assets before April 5, 2014, may reduce your taxable income.
Disposing
CAPITAL GAINS TAX: If you may be disposing of chargeable assets by gift or sale prior to the end of the tax year, please consider Capital Gains Tax planning options to include utilising your Capital Gains Tax annual exemption and a number of other CGT reliefs which may be available with your tax advisor.
INHERITANCE TAX: It is important to review your inheritance tax position, to include considering the annual exemptions available and ensuring that both your will and your business structures maximise IHT reliefs.
ISA ALLOWANCES: The annual ISA allowance for the 2014 tax year totals £11,520. Up to £5,760 of this allowance can be saved in a cash ISA. The remainder of the £11,520 can be invested in a stocks and shares ISA.
Tax planning options should be regularly reviewed as there is no guarantee that any tax planning which is completed today will continue to prove as effective in the long term.
Please contact your tax adviser or a member of Whittingham Riddell's Rural Services Team in order to carry out a full review.
Roy Jackson is a member of Whittingham Riddells specialist Rural Services team
