Your Guide to Tax Planning with Apex Accountants

Published by Farazia Gillani posted in Tax Planning on 22 January 2025

At Apex Accountants, we offer expert tax advice. In this guide, we’ll cover important topics like tax benefits and risks of investments, the importance of professional advice when choosing a business structure, and tax-efficient retirement savings options.

We’ll also discuss how to reduce estate and inheritance taxes and why regular updates in estate tax planning matter. We’ll explain the annual capital gains tax exemption, how to increase pension contributions, and how our tax planning services can help your business grow.

Let Apex Accountants support you through it all.

How Business Structures Affect Taxation

Business professionals in a meeting discussing documents, representing expert advice on choosing the right legal structure.

Different business structures come with different tax rules. If you choose the wrong one, it can cost you more money. Here’s how some common business structures in the UK affect taxes:

Sole Trader: You pay income tax on your profits. If your earnings go above £125,140, you pay up to 45% tax. You also have to pay National Insurance contributions.

Partnership: In a partnership, you and your partners pay tax on your share of the profits. Like sole traders, partners also face unlimited liability, which means your personal assets could be at risk.

Limited Company: A limited company pays corporation tax at 25% on profits over £250,000. Company directors pay tax on dividends, which are taxed at lower rates than personal income. However, running a limited company involves more paperwork.

A savings jar and a retirement sign symbolise the benefits of early and tax-efficient retirement planning in the UK.

Making contributions to your pension is a smart way to save for retirement and reduce taxes. The UK government gives you tax relief on pension contributions, meaning you pay less tax.

Annual Allowance: In the 2024/25 tax year, you can contribute up to £60,000 to your pension. This includes both personal and employer contributions. You can contribute up to 100% of your earnings, and it will benefit from tax relief.

Tax Relief: When you put money into your pension, you get tax relief at your tax rate. If you are a basic-rate taxpayer, you get 20% tax relief. Higher-rate taxpayers can claim extra relief through self-assessment.

Pension Carry-Forward: If you haven’t used all your pension allowance in previous years, you can carry it forward. This lets you contribute more and reduce your tax bill.

Reduce Estate and Inheritance Tax with effective planning strategies and professional financial advice.

There are a few strategies that can help you reduce estate and inheritance tax.

You can gift money or assets without paying taxes. For example, you can give up to £3,000 per year tax-free. If you don’t use this allowance, it can roll over to the next year, letting you gift £6,000.

Small gifts of up to £250 per person are also tax-free. Larger gifts may not be taxed if you live for seven years after giving them.

Trusts are another useful option. They help move assets out of your estate. Some trusts pass assets directly to the beneficiary, while others allow trustees to decide how to share them.

Whole-of-life insurance can also help cover the inheritance tax costs, so your heirs don’t have to sell your assets to pay the tax bill.

A handwritten word ‘TAX’ on a notepad with a marker represents the importance of updating estate tax plan regularly.

Updating your estate tax plan is essential. Life changes. Your personal and financial situations evolve. For example, you may marry, divorce, or have children. These events can affect who gets what from your estate. Your wealth may grow, too. This could increase your estate’s tax bill. Laws change as well. Tax thresholds, exemptions, and rules might shift. Regularly updating your plan helps you use the best options to lower taxes.

Digital assets, like social media or cryptocurrency, need attention in your plan. By reviewing your estate plan, you keep it current. This helps ensure your wishes are carried out. It also reduces the risk of legal problems. The right updates can help avoid delays and confusion for your loved ones. Keep your estate plan up to date for a smoother future.

The image explains the role of technology in compliance by showing digital systems used for legal and regulatory management.

Technology helps businesses stay on top of tax rules and requirements. It makes tax management easier and more accurate. Automation is one-way technology helps. It reduces mistakes and speeds up tasks. For example, tax software helps businesses submit VAT returns on time. It can also handle reports and filings across different regions.

Cloud-based systems store financial data in one place. This makes it easy to access and manage. These systems keep information up-to-date, which is helpful for businesses in different countries. Predictive tools use past data to spot problems before they happen. This helps businesses avoid fines and issues.

Artificial intelligence (AI) also plays a big part. It helps businesses spot problems faster and stay up-to-date with changing rules. AI helps businesses stay competitive and follow the law. Technology keeps everything on track and helps businesses meet tax deadlines.

Business professionals discussing strategies for capital gains tax exemption, reviewing charts and data on screen.

The annual capital gains tax (CGT) exemption allows individuals and investors to save on taxes by reducing their taxable gains. For the 2024/25 tax year, the exemption amount is £3,000 per person. To use this exemption effectively, consider spreading asset sales over several years. This way, you can keep the gains within the tax-free limit each year.

Couples can also benefit by transferring assets between each other, as this transfer is exempt from CGT. By doing this, they can combine both exemptions, which would allow for £6,000 in tax-free gains for the 2024/25 tax year.

If you experience losses from some investments, you can offset them against gains from other assets in the same year. Any unused losses can be carried forward to future years to reduce CGT liabilities.

Image showing rising stacks of coins with tax bags, symbolising ways to reduce capital gains tax liability in the UK.

Timing is key when it comes to selling assets. By aligning sales with the tax year, you can use the annual CGT exemption. For example, splitting a £12,000 sale across two tax years allows you to benefit from £6,000 tax-free each year.

Staggering the sale of assets can help you avoid moving into a higher tax bracket. Selling part of your assets in one year and the rest in the next can keep you in a lower tax band, reducing the amount of tax you owe.

Transferring assets between spouses or civil partners can also lower your tax bill. Since transfers between partners are exempt from CGT, you can combine both exemptions to reduce taxable gains.

Investing in tax-efficient accounts, such as ISAs, is another way to limit CGT. Investments in ISAs are exempt from tax, allowing you to keep more of your profits.

You can also offset capital losses against your gains. Tracking losses lets you reduce your taxable amount, lowering your CGT liability.

An alarm clock and jar of coins beside a ‘Pension’ card highlight the need to maximise pension contributions early.

Pension contributions are a smart way to save for retirement and reduce taxes today. The UK government gives tax relief on pension contributions, meaning you get money back based on your tax rate. Basic-rate taxpayers get 20% relief, while higher-rate taxpayers get 40%.

For example, if a higher-rate taxpayer contributes £20,000, they could receive £8,000 in tax relief. This helps lower their tax bill.

The annual pension allowance for 2023/24 is £60,000. You can contribute up to this amount each year and still get tax relief. If you don’t use your full allowance, you can carry it forward for up to three years. This gives you a chance to contribute more in the current year.

Employers often match your pension contributions, which helps grow your savings even more. Plus, pensions can be passed on tax-free to beneficiaries if you pass away before age 75.

Flat lay of tax tools, reports, and blocks spelling

As your business grows, it can become more complicated with tax. Expanding into new markets or hiring employees brings new tax rules. Apex Accountants can help guide you through this process.

We can help you save on taxes by spotting deductions like equipment or marketing expenses. This helps you keep more money for growth.

Apex Accountants also advises on tax reliefs, such as capital allowances. This helps reduce taxable income when buying plant or machinery. It’s a great way to support your business expansion.

When structuring your business, we focus on keeping more profits inside the company. This allows you to reinvest and grow without paying extra tax.