I’m an individual running a business, just like you.
To make sure I’m aware of all the tax saving opportunities available to my business, I run a tax diagnostic review on A to Z Finance Solutions (my business). It’s the same level of tax consultancy I offer to my clients. There are 5 levels of tax reviews a business might need, dependent upon where the business is up to in its business lifecycle. This is an example of my own level 2 tax review.
A Tax Review is like doing a MRI scan on myself and my business to make sure that I’m aware of all of the tax saving opportunities available to me. This is a unique service that’s not been available openly by other accountancy professionals, I know this because clients who have used our tax service have given us feedback such as "Why don't other accountants do this i.e. identify all the possible tax saving opportunities applicable for our circumstances" and "- I have never been through this process with other accountancy firms".
So, to provide that proof of concept... Here’s my story.
After completing a tax review on me and my business I brought 17 tax advisory areas to my attention. Plenty that I’m already aware of, plus a few new opportunities and its only visible when we do this exercise start to finish. It’s a no stone is left unturned approach and the process makes sure I’m considering everything before I prepare an action plan. Without a tax diagnostic review, the required actions do not take place.
I shortlisted 4 areas that I wanted to work on immediately, picking things that best connect to my goals and also my clients!
1. Maximise on Claiming Expenses & Investing my Spare Cash
2. Pension contributions, through my business (+ Auto enrolment)
3. Cash Remuneration – in particular taking loans from my business.
4. Life insurance policies
Save Tax and Invest more Personally
I was able to identify lots of tax deductible expenses which can be deducted as Business Expenses and I am able to save Corporation Tax and Income Tax. The eligible expenses identified that would normally be funded through my post tax personal income, now can be claimed through my business which means I can save more money.
With the tax savings I have been able to put more aside into my savings and investments pot, as long as I invest this money, it will give me a return on my money especially when you consider the compound effect of continuingly investing. Of course Risk is involved I am considering both risk and reward and investing in different schemes starting from Stocks & Shares ISAs and to not keep all my eggs in one basket and to diversify.
Nobody’s too busy for retirement.
As a Business Owner I realised for me and for my clients that running your own business isn't easy and we all need to get better at making the right choices and making time for the Important Tasks. One of the ways for me is to pay Pension contributions through the business so I can be more tax efficient and get closer to my pension income for the retirement.
So the history here is, I have a pension plan from my previous employments but I hadn’t paid anything into it since I left them jobs. so when thinking about retirement, I remind myself of what am I working towards and what I want from Life. It’s been a helpful to take time out to think about what I want, we never take time out to truly map out what we want.
So when I think about retirement, I worked out what I would like to pay into a pension plan. Whatever I pay into it, I’m going to be making a corporation tax saving on it. Pensions aren’t guaranteed but I do hope to live long enough to start reaping the benefits from the age of 55.
I want to be able to put enough into my pension for me to feel like I can stop worrying. If contribute £500 a month it will save me around £1,140 in Corporation Tax Savings each year and I contribute £6,000 into my pension pot each year so it only costs me £4,860 each year.
Planning for retirement is important. For a small amount every month, it’s gonna benefit me long term whilst benefiting my business immediately, with the CT savings.
I am also keen to buy our own office premises within the next 5 years and with doing a tax review and tax advice I plan to setup our own SSAS Pension Scheme as it will tick more of our goals , in terms of more tax savings, long term property investment via our own secure controllable pension fund and It will tie in well with our future retirement funds as well as Managing our Inheritance tax liabilities. With a SSAS we will be receive rental income, gain office space and the property will be part of our own pension pot and will be tax free! It's a very tax efficient scheme where you save CT on the money paid in, and when you retire you can take a tax free 25% lump sum and the remaining can be income across future years and you can take advantage of your personal allowances.
We offer our clients this service to set up a Personal SSAS Pension Scheme via our tax advice areas. Get in touch if you are interested ....
A real winter warmer.
Cash Remuneration - So there are many ways to get a loan however I don’t want to incur any director penalties, or brutal interest rates.
A £10k Loan is completely tax free if I take it from my business. I can repay it when I’m ready. So I decided I need £10k to live out a dream of mine…
My dream car is an Aston Martin. Unfortunately, £10k isn’t quite a stepping stone for that dream. But I am thinking about purchasing something a little more realistic in the meantime!
In winter, we have a LOT of cold weather in the UK. I’ve always wanted an outdoor sauna to counter that. I’d love to have an outdoor sauna / steam room. It’s quite a cool luxury to have during the cold season, and the tax review helped me confirm that I can use an employee loan to achieve my small dream. In terms of my big dream of buying a Aston Martin's… dream on for now but working towards that goal in the future.
Who’s your next of kin?
I’m looking going to get a tax efficient life insurance policy, too. Alongside the monthly tax cost savings, life insurance policies can also be written ‘into trust’ so that they are outside the scope of inheritance tax.
It’s important that I’m set up to leave something for the family. All of our hard work as business owners should go towards the people most important to us. People take them out, and I always advise them to. Now it’s my turn. If it’s tax deductible and it gives me peace of mind that my family have something left for them… why wouldn’t I!?
The tax diagnostic review has got me thinking about putting this through my business. The most important thing is getting it done and I can make tax savings at the same time.
Things you should consider
I have mostly found things that I should be putting through my business, to improve my life whilst saving tax and saving money in the short term and long term returns.
I can’t help but think of my clients in everything that I do. So, I thought I better make note of these 2 results that are applicable to others in different situation to me.
Tax efficient childcare.
You can put childcare through your business. I don’t have children so it’s not relevant to me, but I know most of my readers will be able to relate to this. There are three potential ways to help fund childcare in a tax efficient way. Get in touch if you’d like to look into this further.
It’s not 100% relevant to me, and that’s probably going to be the case for you 1-2 director companies where you’re paying yourself the minimum…
BUT! If you’re paying yourself more than the minimum (for example, to help pay a mortgage) there is a certain percentage you should be paying into your pension.
This is something you need to be aware of. If you’re meant to be doing this and not, you need to start or you could face fines. This is a minimum requirement we have to comply with.
When I take on Employees rather than freelancers , They will be employed by A to Z finance Solutions and I too will be in the same boat!
If you need a hand auto-enrolling yourself or your employees into pension contributions, get in touch.
My business is like your business.
A to Z Finance Solutions is a growing business. The practice has been running for over 8 years and the company for over 11. You may not have been around for that long, or maybe longer, but as long as you’re profiting and growing you should be looking to maximise your takings from the business whilst investing into your future. You can do all this whilst mitigating chargeable profits to corporation tax.
We all want very similar things, that’s what I’ve learned through working with my clients over the years.
What’s next for me?
I’ve very much focused on cash remuneration and employee benefits this time. The next time a do a tax diagnostic review on myself, I reckon I’ll be starting to think about the structure of my business.
If we spot the opportunities in advance of the decision, it becomes another area where significant tax savings can be made. I have another specialist tax review for that stage in a business’ lifecycle.
Long term, I haven’t thought about removing myself from the business yet, but that day will come and… you guessed it… I have another tax diagnostic review for that!
To put it simply… whether you’re a start-up or at the very end of your business journey, I have a tax review for your specific needs. It will be like nothing you’ve received before.
Sign up for a tax diagnostic review, that’s appropriate to you.
A typical advisor delivers tax advice in an ad-hoc way.
When the tax bill comes in, or after a decision is made, it’s often too late to make the saving. It’s nearly always too late to explore all options. I deliver this service to my clients, and myself, because I know it’s worthwhile. The tax diagnostic review really helps to make better decisions based on where you are and where you want to be.
We also offer a money back guarantee on our tax review 2 because it is a investment rather than a cost. We guarantee we will identify at least 3 x cost of the tax review in Tax Saving, Opportunities and Tax Schemes for you.
If you like the sound of our tax services get in touch and we can help you to get more tax efficient and begin your tax saving journey.
Get in touch to find out what we can do for you...