Income Tax and Corporation Tax Planning Tips for Business Owners

by | Jun 7, 2021 | Tax Advice | 0 comments

Every year without fail our tax deadlines approach and we begin to panic at the thought of what we need to complete. In order to help you manage this period, we have compiled a checklist to ensure that you are availing of all the relevant tax opportunities before the end of the year:

Business Taxes

  1. Review your accounts figures before your year end to plan any closing transactions to avail of tax opportunities, for example:
    1. Consider bringing forward capital expenditure that qualifies for capital allowances so you can get your allowances earlier.
    2. If your accounting period end is 31st December, then any pension contribution you intend to pay must be paid before 31st December to get a deduction in your accounts.
  2. Claim home business expenses. For example: Any computer equipment or broadband fees.
  3. Sell to your company any assets that you own personally, but use for business purposes (this could be your computer equipment). The company can pay you free of tax.
  4. If you are a sole-trader consider incorporating to avail of lower corporation tax rates.
  5. Make sure you have claimed tax relief on any qualifying pre-trading expenses.  More often, this is often overlooked.
  6. Offset trading losses against other income..
  7. For new businesses check if you qualify for corporation tax start-up relief.
  8. Tax relief is available to individuals for setting up their own company, so, check if you qualify for seed capital relief.

Employees

  1. Make sure that all family members; partner, children of working age etc. who work in the business are being paid a salary for the duties performed.
  2. Tax Free benefits in kind:
    1. Pay directors and employees a tax free non-cash bonus of €500 per tax year
    2. Buy a monthly or annual travel ticket for your employees
    3. Remote working and working from home allowances
    4. Job related training
    5. Bike to work scheme
    6. Meals in staff canteen areas
    7. One medical check up per annum

Pension Contributions

  1. Employer Pension Contributions: employer contributions far exceed the limits that directors or employees can pay personally therefore consider a company pension scheme for directors or employees.
  2. Pay pension contributions on behalf of family members working in the business.
  3. Personal pension contributions paid before 31st October can be carried back and income tax relief claimed for the previous year.
  4. In low income years consider paying voluntary social security to retain entitlement to state retirement pension. 

Income Tax

  1. Pay your annual preliminary tax by direct debit from January of that year as this is a good way to manage cash flow while paying your taxes on time.
  2. Claim home carers credit. However, additional conditions may apply.
  3. You can earn up to €14,000 tax free if you let a room in your house. Again, additional conditions may apply.

4 Year Deadline

  1. The 31st December is the four year deadline for tax relief claims relating to the tax year 2013; for example, tax relief on:
  • Qualifying medical and dental expenses
  • Tuition fees
  • PAYE refunds
  • Home Carers Credit
  • Year of marriage credit
  • Rent relief