As the 2024/2025 tax year comes to a close on 5th April 2025, now is the perfect time for Owner Managed Businesses to review key tax planning opportunities. Taking action before the deadline can help ensure you’re making the most of available allowances and little changes can really make a big difference to your tax bill!

Luckily, our team have put together some key points for you to consider:

1. Have You Taken Advantage of “Trivial Benefits”?

Keep your company happy with trivial benefits! Businesses are allowed to provide trivial benefits to employees and directors – small treats up to £50 each time (excluding cash or cash vouchers). This could be meals out, a bottle of wine or even a bunch of flowers to celebrate their birthday.

Please note:

  • Directors have a £300 annual cap, but there is no limit for employees.
  • The benefit must not be a regular gift or a reward for work done to qualify for the tax exemption.

2. Annual Party Allowance

Hosting a staff party? You can also claim up to £150 per attendee (including VAT) tax-free, as long as:

  • The party is open to all employees.
  • The amount covers travel and accommodation costs.
  • The total spend stays under £150 per person (if you go even a penny over, the full amount becomes taxable!)

3. Personal Allowances

With personal allowances and tax bands frozen, directors should review their salary and dividend mix to ensure the most tax-efficient setup. Working with an accountant can help ensure you’re making the most out of your tax band. If you need help or advice with this, feel free to contact a member of our team for tax planning support.

4. Employer National Insurance Increase

Despite changes in National Insurance thresholds and rates, £12,570 remains the most tax-efficient salary level for many directors. Make sure you’re paying yourself in the most efficient way possible.

5. Pension Contributions

Remember that if you maximise company pension contributions, you can significantly reduce your Corporation Tax (currently between 19% and 26.5%). All you need to do is make sure that you have paid the maximum allowable pension contribution before 5th April 2025 to benefit from tax relief.

6. Pension Top-Up

Have you checked your Personal Tax Account to ensure you qualify for the maximum pension? The deadline for topping up contributions for the 2006/07 tax year onwards is 5th April 2025. After this, you’ll only be able to backdate six years.

7. Spouse Dividends

If your spouse is in a lower tax band than you, consider transferring shares to them. This allows them to receive dividends at a lower tax rate, meaning that you can utilise all of their basic rate tax band whilst you are paying higher tax rates.

8. Annual Investment Allowance (AIA)

Your company can claim 100% relief on plant, equipment, and eligible commercial property refurbishments up to £1 million. If you are considering a major purchase, do it just before the tax year ends, don’t wait until April!

9. Tax Benefits for Cars and Vans

  • Electric Cars: Businesses can claim 100% first-year allowance on electric car purchases, with no upper limit. Plus, electric cars come with low Benefit-in-Kind (BiK) charges, making them an attractive option.
  • Double Cab Pick-Ups: Historically taxed as vans, these will now be taxed as regular cars from 6th April 2025. If you’re considering buying one, make sure to do it before the tax year ends.

10. Entrepreneurs’ Relief (Business Asset Disposal Relief)

If you’re selling or liquidating your business, act fast! The Entrepreneurs’ Relief tax rate is rising from 10% to 14% from 6th April 2025. Completing transactions before the deadline can help you make some big savings.

Let Red Fish Help You with Tax Year-End Planning

Red Fish Accountancy offers tax planning meetings for just £250 + VAT. Our team of experts will review your individual circumstances and help you make the most tax-efficient decisions for your business.

Don’t leave it to the last minute! Contact us today:

📅 Book your meeting Jennie, Ollie

📞 Call us on 01903 900151

📧 Or drop us an email to enquiries@redfishaccounts.co.uk