Lower corporate tax rates are staying; and the 20% corporation tax rate is an attractive alternative to being taxed as a sole trader.
From 5 April 2011, private car business usage claims are now at the rate of 45 pence per business mile. If you do say 3,000 miles on business trips annually, you are owed £1,350 by your company. If your employer does not reimburse you, you can make a similar claim to HMRC.
Company cars remain expensive because of the taxes imposed for personal use. Avoid buying a car through your company unless it has emissions of below 125 grams per km, such as the Honda Jazz.
For those earning £100,000 to £114,900 per annum, the effective rate of income tax is 62% including national insurance. This "penal" tax rate can be avoided by making a pension contribution.
The new pension regime leaves the old 2006 rules far behind us. The upper limit is now £50,000 per annum, and the limit is assumed to have run since 2008, meaning that those who have underpaid from 2008 can top up.
EIS tax relief has increased to 30% for those that like to buy EIS shares. These shares are risky and we cannot advise you on the financial ramifications of individual purchases. The UK tax relief is very inviting though, especially if you can sell the EIS investment for a tax-free profit after 3 years. A negligible value claim can limit the downside on a loss.
If you leave the decision of whether to buy new equipment until the end of this accounting year, you can be caught out by changes to capital allowances, effective from April 2012. Large capital purchases made between 31st March 2012 and the end of your accounting year may not qualify for the 100% deduction against profits.
Those who wish to make a deathbed charity gift should consider the new rules when writing a Will. A reduction in Inheritance tax will be given for gifts of substance.