Category Archives: family business

5 April 2018 year end tax planning – in three minutes

A quick checklist before 5 April:

  1. Maximise ISA savings
  2. Review pension contributions
  3. Consider pension tax breaks for your children (even minors)?
  4. Use your capital gains tax allowance
  5. Use your £5k dividend 0% tax band (and note its reduction to £2k from 6 April 2018)
  6. 30% income tax relief, using EIS/VCT investments?
  7. Review and note gift aid tax relief
  8. Pay any outstanding 31 January 2018 tax before 2 March, to avoid a penalty
  9. Check your PAYE coding notice and benefits package
  10. Will your tax on rental income rise, due to the interest restrictions?
  11. Use personal allowances of spouse, children and grandchildren
  12. Are you paying high marginal rates of tax?
  13. Business – extract cash in a tax efficient way (salary, loan, dividend, rent, pension?)
  14. Trusts – create new ones; distributions from existing ones; close down old ones; do you need to complete the trusts register and keep sufficient records?
  15. Inheritance tax – gifts, update will or letter of wishes, create lasting power of attorney
  16. Get a fixed fee quote for your 2018 tax return
  17. Are you a Scottish or Welsh taxpayer?
  18. Are any overseas assets or income taxed correctly in the UK and overseas?
  19. Have you set up your online personal tax account with HMRC?
  20. Do you have a tax payment on account to make on 31 July 2018?

These are prompts rather than fine detail – for further information please contact me.

10 questions for family business owners

As a business begins to pass to the next generation three common themes tend to develop:

  • “too many” children in the next generation (also known as a great talent pool!)
  • a divergence in objectives from those of the founder – eg “this company will never have debt”
  • new skills required as the business grows

A written agreement or family constitution may help to address these issues. Before that is drafted, here are an initial ten questions for the family to consider:

  1. What are the main reasons to continue, rather than sell?
  2. What education, skills and outside business experience should a family member have before becoming a director of the company, shareholder or trustee of a family trust?
  3. Do family members not working in the business rely on dividends or seek external employment?
  4. What future family conflicts may arise?
  5. Should the business always be wholly owned and run by the family or will it benefit from external hires?
  6. What core business and family values need to be maintained?
  7. What should happen if a family member wants to sell their shares?
  8. What criteria should be in place to remove a family member as director or shareholder?
  9. At what age should family members retire as a director of the company or trustee of the family trust?
  10. Will dividends and pension be enough to support the lifestyle of the retiring members?