2008 Year End Tax Planning Tips
12th December 2008- File your tax return early if you are due a refund of income tax or corporation tax.
- The new income levy (of up to 3%) applies to all payments received in 2009; consider paying any 2008 bonus/dividends before the year end so as to avoid this additional tax.
- Review the carrying value of trading stock (including land where appropriate). Any write down will be tax deductible, reducing the liability for 2008. If a loss arises, companies may be able to claim a refund of tax paid in 2007.
- Review debtors, bad debts are tax deductible. Traders accounting for VAT on an invoice basis can claim a VAT refund where it can be shown that the VAT is irrecoverable.
- Ensure company pension contributions for directors are paid before the year end.
- If you or your company made a chargeable gain in 2008, consider selling other assets (such as shares) before the year end to create a loss which can be offset against the gain.
- BES relief of up to €150k can be claimed for qualifying investments made before the year end, the relief can be claimed against all income including salaries. Relief is available in respect of 80% of funds invested in FILM schemes, subject to a maximum investment of €31,750 (i.e. max relief €25,400).
- Consider paying (or increasing) salaries to all family members who work in the business so as to fully avail of their tax credits and lower rate tax band. Tax free termination payments can be made to family members who no longer work for you or your company.
- Interest received from 1 January will be subject to tax at 23%. Ask your bank if they would pay any accrued interest before the year end so as to pay tax at the lower rate of 20%.
- Consider buying new plant and machinery before the year end so as to get a full years capital allowances in 2008.
- Tax relief for medical and non-routine dental expenses will be restricted to 20% from 1 January. Consider prepaying for treatment before the year end so as to avail of relief at 41%.
- Consider gifting assets to family members now to avail of low valuations and therefore reduced CGT / Gift tax liabilities.
- Review VAT / PAYE direct debits to ensure you are not over or underpaying tax.
