As the end of the tax year approaches, it’s time as a business owner to review your finances. This guide will give you further insight to ensure reliefs are maximised and planning opportunities are considered.
Year End Tax Planning for Business Owners (2024/25)
18 February 2025
Owner Managed Businesses
Profit Extraction
With varying tax rates and changes in National Insurance in recent years as well as a forthcoming increase in Employer’s NIC, there has never been a better time to consider the tax efficiency of profit extraction from your business.
How you extract your profits from your business can include:
- Salary
- Dividends
- Pension
- Benefits
- Rent on a Property you own
The way in which you do so can have a significant tax impact on you personally but also on your company. The best approach will depend on your personal circumstances.
If you are considering extracting a sum of money from your company in the near future, please contact us as a matter of urgency to understand how best to do this and in light of the increase to 15% in Employer NIC from April 2025.
Double Cab Pick ups
Businesses using double cab pick-ups (DCPUs) are facing new rules from April 2025.
The current tax treatment of double-cab pickups is changing from 1 April 2025 for Corporation Tax and 6 April 2025 for income tax.
Historically, double-cab pickup vehicles with a payload of over 1 tonne have been treated as ‘goods vehicles’ for Capital Allowances and Benefit in Kind purposes, giving greater capital allowances and reduced Benefit in Kind charges compared to non-electric cars.
However, from April 2025, double-cabs pickups with a payload of more than 1 tonne will be treated as cars.
The existing Capital Allowances treatment will apply to purchases made before April 2025.
Transitional rules will apply for Benefit in Kind purposes for employers who have purchased, leased, or ordered a double-cab pickup before 6 April 2025. The previous treatment will continue until the earlier of; the vehicle’s disposal, the expiry of the lease, or 5 April 2029. It is important that any business owner looking to purchase or lease a DCPU should review the position asap to take advantage of the transitional rules.
Maximise Capital Allowances
Ensure claims are made for:
- Annual Investment Allowance of up to £1m
- Full expensing to gain 100% relief for costs incurred
- 50% relief on long life assets
- Structure and building allowances on acquisition of commercial buildings or their construction
Business Asset Disposal Relief (BADR)
BADR is available on certain business disposals by charging a lower rate of CGT on the first £1m of gains.
For those looking to exit a business, BADR rises from 10% to 14% for disposals made on or after 6 April 2025 and will increase to 18% with effect from 6 April 2026. There is a small window of opportunity to claim BADR at these lower rates
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