Ten top tips for reducing your tax bill

3. Invest in an ISA

Up to £11,520 can be invested in an ISA in 2013/14, of which up to £5,760 can be invested in cash. Most income accrues tax-free, although the tax credit on UK dividend income cannot be recovered. All investments held in ISAs, including the new Junior ISAs are free of CGT.

4. Use your capital gains tax (CGT) allowance

Make the most of your CGT exemption limit each year (£10,900 in 2013/14). It may be possible to transfer assets, quickly or over time, depending upon the size of your asset holdings, to a spouse or civil partner or hold them in joint names prior to any sale to make full use of exemptions.

5. Review your capital expenditure to maximise claims for capital allowances

6. Review your business structure

The structure of your business can have a significant impact on your annual tax bills. If a sole trader or partnership, explore the tax advantages of registering as a limited company.

7. Write a Will and keep it up-to-date

A well-drafted Will can ensure that any wealth you have built up during your lifetime can be structured to save tax. However, you must review it regularly to ensure it reflects changes in family and financial circumstances as well as changes in tax law.

8. Utilise inheritance tax (IHT) exemptions

You should make the best use of IHT allowances, including the annual exemption, which allows you to give away cash or assets up to a total value of £3,000 a year without incurring any taxes.

9. Go for green transport

Switch to a ‘green’ company car with low CO2 emissions and reduce your tax liability, as such vehicles are taxed at a lower percentage rate.

10. Rent out a room

Under the ‘rent a room’ scheme, income from letting furnished rooms in your main residence is exempt from tax if the gross annual rent does not exceed £4,250 (£2,125 if you share the income).

Keeping your tax bill to a minimum is not a matter of aggressive or complex tax schemes, but rather of identifying which tax reliefs and allowances specifically granted by law, are available to you. Sensible tax planning is an essential in making the most of your finances and helping your business’s profitability.