Welcome to the latest Newsletter from Connolly Accountants Ltd

The subject of tax avoidance has seen unprecedented levels of media coverage in recent months, and HM Revenue & Customs recently heralded its victory against three tax avoidance schemes worth an estimated £200m to the Treasury in lost revenue.

However, proper tax and financial planning is more important than ever in these challenging economic times, with a recent report from the Chartered Institute of Personnel and Development warning that the coming year will be 'make or break' for many UK employers.

Sensible tax planning is an essential and legitimate tool in making the most of your finances and helping to boost your business's profitability. For our top tips on reducing your tax bill, see the article below.


Top tips for reducing your tax bill

Keeping your tax bill to a minimum does not have to be a matter of aggressive or complex tax schemes, but rather of identifying which of the many tax reliefs and allowances specifically granted by law are available to you.

From ISAs to capital allowances, here are our top 10 ways of saving tax - for you, your family and your business.

1. Maximise personal allowances
Ensure that you are making the most of the tax-free personal allowance (PA), which for 2012/13 is £8,105 for those aged under 65, or the higher rate age-related allowance which is up to £10,660, maximum income £25,400.

2. Pay into a pension scheme
Investing in a company or personal pension scheme will afford tax breaks on your personal pension contributions. For 'additional rate' taxpayers, maximising pension contributions (within limits) during 2012/13 will allow you to obtain relief at the rate of 50% (45% from April 2013).

3. Use your capital gains tax (CGT) allowance
Make the most of your CGT exemption limit each year (£10,600 in 2012/13). It may be possible to transfer assets to a spouse or civil partner or hold them in joint names prior to any sale to make full use of exemptions.

4. Invest in an ISA
Up to £11,280 can be invested in an ISA this tax year, of which up to £5,640 can be invested in cash, and most income accrues tax-free.

5. Review your business structure
The structure of your business can have a significant impact on your annual tax bills. While in the early years of a business it may be advisable to operate as a sole trader or partnership, as profits increase it may be more beneficial to form a limited company or put in place a hybrid structure.

6. Go for green transport
Switching to a 'green' company car with low CO2 emissions can reduce your tax liability, as such vehicles are taxed at a lower percentage rate.

7. Review your capital expenditure
Review your capital expenditure to maximise claims for capital allowances. The majority of businesses are able to claim a 100% Annual Investment Allowance on the first £25,000 of expenditure on most types of plant and machinery (except cars).

8. Rent out a room
Under the 'rent a room' scheme, income from letting furnished rooms in your main residence is exempt from tax if the gross annual rent does not exceed £4,250 (£2,125 if you share the income).

9. Write a Will and keep it up-to-date
A well-drafted Will can ensure that the wealth you have built up during your lifetime benefits the right people on your death - and it can also be structured to save tax.

10. Utilise inheritance tax (IHT) exemptions
You should make the best use of IHT allowances, including the annual exemption, which allows you to give away cash or assets up to a total value of £3,000 a year without incurring any taxes.

For more detailed information on these tax-saving ideas, visit the Hot Topics section of our website.


'Make or break' year for UK employers

Employers will be forced to make further job cuts if the UK economy does not improve over the course of the next year, a new report has warned.

The survey, from the Chartered Institute of Personnel and Development, revealed that despite a recent reduction in unemployment figures, a third of employers in the private sector have retained staff solely in order to avoid losing their skills base.

However, nearly two thirds of employers warned that if economic growth does not pick up in the next 12 months, they will need to reduce staff numbers.

The author of the report, Gerwyn Davies, said, 'The tenacity with which employers are hanging on to skilled labour is a reflection of the high value they place on it and the damage they fear will be done to their businesses if they are forced to start making more redundancies'.

The report was shortly followed by news of an unexpected increase in UK borrowing, with the Office for National Statistics revealing that borrowing reached £600m in July.

The Treasury has blamed the figures on disappointingly low corporation tax receipts, which normally provide a boost to the economy at this time of year.

The news has triggered criticism of the Government's plan for dealing with the UK deficit, with Labour arguing that rather than securing the recovery and reducing the deficit, it had instead 'delivered the exact opposite - a double-dip recession which is leading to soaring borrowing'.

The Office for Budget Responsibility stated that the outlook for borrowing this year remains 'uncertain', with some analysts suggesting that it could rise by around £30bn.


ESSENTIAL TAX DATES AND DEADLINES

30 September
End of CT61 quarterly period.
Last day for UK businesses to reclaim EC VAT chargeable in 2011.

For more information on key tax dates and deadlines, visit our 2012/13 Tax Calendar.


QUOTE OF THE MONTH

'Maintaining Sunday's special status has great merit for our customers and our colleagues, and relaxing Sunday Trading laws is certainly not a magic answer to economic regeneration'.

Justin King, Chief Executive of Sainsbury's, commenting on Government plans to consider the impact of the relaxation of Sunday Trading laws, during the 2012 Olympic Games.


WEBSITE OF THE MONTH

www.london2012.com/paralympics

The official website of the London 2012 Paralympic Games.


ON OUR WEBSITE

Essential business advice
Our website contains a wide range of information on successfully managing your business. Visit the Your Business area of our website to find out more.

Boosting your personal wealth
And for advice and strategies designed to help boost your personal wealth, visit the Your Money section of our website.

'More than half' of SMEs rely on a spouse to help run the business
A new study has suggested that 51% of small business owners and managers rely on their spouse or partner to help run their business - with many working on an unpaid basis.
Click here for the full story

New measures to 'transform consumer rights'
The Department for Business, Innovation and Skills has published a consultation on proposed new measures under the Consumer Rights Directive.
Click here for the full story

Scrapping Sunday trading laws 'is no magic answer'
Plans to consider the impact of the temporary relaxation of Sunday Trading laws have sparked criticism from groups opposing the measure.
Click here for the full story

Revenue sends £1,200 penalties to half a million taxpayers
HMRC is sending penalty notices of at least £1,200 to around half a million taxpayers who have failed to file their 2010/11 self assessment tax returns.
Click here for the full story

Government joins small business groups to tackle late payment
The Government has joined forces with some of the UK's leading small business groups in a bid to tackle the ongoing problem of late payment.
Click here for the full story