My Own…Maximising Extracting Value Tax Diagnostic

Meet Gwil, a business owner who’s received a tax diagnostic review. A service that’s available to you. Find out some of the tax-efficient things he’s doing to achieve his real-life number and take more value out of the business for himself and his family now and over the next 5-10 years.

For a number of years now I’ve been operating across a range of businesses. Therefore when I look at the 32 ways, I’m looking at it in that context.

For me, money management is not about the money you earn, but the money you keep. That’s why I love tax consultancy so much. It focuses on this mantra.

Household Income

It’s important to me that we maximise our household income in a tax efficient manner. The way we do that seems to have changed so much over the years as we’ve gone from care free pre-kids to responsible parents (ish) post-kids! Currently, this involves my Mrs being employed by the business, she’s an financial chartered accountant so we might as well use her! This suits the business as we have an important function covered. It suits my wife who wound down slightly from her career after we had kids. It also suits our household income because we are taxed across the two of us, not just me. This means we benefit from maximised personal allowances, lower level tax bands and the company can make a national insurance saving.

I needed a dividend for extra expenditure

Not the norm for me, but the current year was a bit of a spending year – ouch! Thankfully, they only seem to happen once every ten years as I’m such a tight arse! But this year we had some extensive work done our home…which seemed to go on forever! Plus, we had a few lovely holidays as me and the Mrs had been married for ten years. We took the family to Disneyland Florida over Xmas and New Year which is something I’d always wanted to do. Me and the Mrs went to Paris on our own, which we’d not done since before Oscar was born…now 8 long years ago! To do this, I took out a dividend, the £2K tax free amount, plus a little more to keep the clan in a happy home and enjoying our ten years married celebrations! 

Building retirement investments

My years of frugality in extracting money from the company paid dividends a few years back when I set up a SSAS which bought the office premises. Nice little arrangement which ensures the guaranteed rent is paid back into my pension tax free! Purchase of commercial property No 1 has wetted my appetite for more, so I’ll always invest as much as I’m able into this arrangement with a view to eventually planning the next investment. I’m a bit of a nerd so these kind of things excite me! I think it’s because I feel in control with it…firstly it’s a very tax efficient way to put money aside as you pay no income tax or national insurance when the money is paid in (subject to the limits). You also get a corporation tax deduction on the money paid in. Plus I get to dream…plan a future commercial property empire…long way off but hey, dream big! When I retire, which is probably never as I’ll get bored…so when I reach retirement age…I’ll take 25% tax free with the remainder being taxed but spread across multiple tax years, making the most of the personal allowances and tax rates. I want to live a highly active but extremely comfortable work / life retirement…I just can’t see myself retiring…but let’s see!

I’m not that into Cars, but…

I’m not massively into cars. I’ll be honest enough to say, I want something that looks decent, but not too flashy. One of the businesses had done really well so it was a bit of a no brainer to go for an electric vehicle when the time came around last year.  Reason being we got 100% corporation tax relief against profits in that year, plus there is no BIK on me. It’s all the extra running cost aspects I was able to put through the business and take advantage of as well like installing a charging point at home, charging tax free at the office, car insurance and servicing which all normally add up to a pretty penny. I did have my eye on also putting a personalised number plate (GWIL-I-AM TAX) through the business (which is allowable) but Mrs D said she would divorce me! Quite right as well!

Company Loans

Way back when I lent money into the companies to get some started and the company paid me a commercial rate of interest back on that money which allowed me to take out £1K from the business tax free. However, the circumstances have changed, that money has now all been repaid to me and a few years back I instead took out a £10K tax free loan from the business. I didn’t need it, I just took it because the company had spare cashflow and you can take the loan of £10K tax free. My thinking here was to simply invest this and make more back, it’s a strategy that’s worked and I’ve made a fair amount on investing that £10K well.

Maximising business expenses paid for personally

Running a business takes grit, it’s hard to switch off and you are always working because it’s your passion. That’s why for me, it’s vital to maximise business expenses wherever possible. That means ensuring claiming travel expenses on trains/flights, mileage allowances,  when travelling for business. Also subsistence expenses when eating & drinking when on travelling on business as well.

I also ensure I double bubble the benefits by spending in a points reward card. My favoured card is Amex as they have a points rewards system connected to Airmiles. In the last year doing this I’ve built up enough points to travel to Paris 1st Class for £2. Then to Florida family of 4, 2 free tickets and upgraded to 1st class there and back. All because of the points I built which enabled me to do this!

Employee Benefits

The tight arse in me ensures I maximise the hell out these with all the following being put through the busines at every opportunity:

  • Life Insurance, it’s personally really important to me that my family is secure if anything were to happen to me.
  • My annual pension advice tends to be mostly covered by the £500 allowance
  • Mobiles – four in total for me and the Mrs – personal and business
  • Trivial benefits – albeit in £50 amounts the £300 from me and £300 amount for my wife ensures all Christmas and Birthday presents are covered in our household
  • £150 per head slap up dinner for the Xmas Do where we also have a good dance
  • Parking costs when visiting the office

New bicycle & weight loss.

It’s something that I’ve been aware of for a while, but never got round to doing. I used ‘Salary Sacrifice – Cycle to Work Scheme’ to purchase an expensive road bike, pre-tax, and in instalments. This reduced my tax liability on income & NI, plus it gets me a dream bike, without a surprise mammoth expense. Most importantly, it’s gets me exercising. Sexy bike. Sexy body. Tax is sexy!

Future intention

I would like at the right point to start exploring a family investment company.

For me this is about retention of earnings for me, my family and the business.

Book a Tax Diagnostic Review

To make sure you’re getting all the benefit from the tax saving opportunities available to you and your business, book a tax diagnostic review with us.

Get peace of mind you’re aware of all the tax advice relevant to you.

What is Your Real-Life Number?

Every business owner has a real-life number. It is everything behind the scenes, that you are working towards in your real life, things like your next house, next big investment, or your pension pot.This real-life number can and should be linked with everything that the business is working towards. It is the key to achieving the life you really want, both now and in the future.

But many business owners can find themselves controlled by their business. They become wrapped up in running the business and unable to focus on improving their lifestyle.

You see, for many business owners there can become a disconnect between the work that is being done in the business and the impact it can have on their lives. But the only way to achieve your real life number, is by looking inside the business and getting serious. One of the ways you can do this is by understanding how tax advice and consultancy can help you achieve your real-life number tax efficiency.

This is where we come in.

To help you reap the rewards of you real-life number, we’ll work with you to:

Identify your real-life number

To start we’ll look at your current position and what your business can pay you right now. We’ll then look at what you need to achieve, to get you to the real life number that you want.

Impact of business performance

We’ll then review how your business performance is impacting your ability to achieve your real-life number.

Identify ways to make tax-efficiency savings

Using our expertise and knowledge, we will help identify tax saving opportunities, meaning you can take extra money out of the business for you and your family right now.

We’ll also make plans to take an extra sum out of the business during the next five to 10 years.

What information will we need to help you achieve your real-life number?

If we’re to help you achieve your real-life number, we really to get know you. This means getting know things like…..

Family

Are you married? Do you have children; if so, how old are they? Are your parents still around; if so, how old are they? Who is bringing in income; what is their job and how much do they earn?

Big life investments

What big life investments do you have planned? For example, do you intend to buy a bigger house, new cars, holiday home etc. How much money will your planned investments cost?

Family investments

What do you want for your kids? Nothing? School funded? University funded? First home? What amounts do these come to?

Protection Investments

How are your protecting yourself now and into the future? Things like insurance policies such as Medical, Life, Critical Illness, Income Protection, Key Person Insurance, Death in Service Insurance and so on.

Pension Investments

What are your plans pension wise? Are you planning to use a company pension, standard pensions, SIPP or SSAS? Do you want to generate more in order to take out more and fund a pension? How much would you like to fund each year?

Lifetime Investments

Outside of pension investments do you have a set amount you want to create – a disposable income wise to invest each year? What is that amount?

Lifestyle expenditure

What is your lifestyle generally like? Are you spending all the money you extract via salaries and dividends from the company on life expenses?

It looks likes like a lot of information but if you’re serious about achieving your real-life number and taking more value out of your business, this is what it takes.

Value Extracting Tax Diagnostic Review

We have launched a tax diagnostic review service that will analyse your business and personal circumstances, to identify all the ways you can tax efficiently put things through the business, or take value out of the business, benefitting you, your family and even your employees.

Find out more about the Value Extracting Tax Diagnostic Review

Do you know your real-life number

If you want to get a better understanding of the tax position of your business, get your real-life number down, and get a plan in place, we can help you get you there.

Let us help build your future. Book a discovery call and start your journey with us today.

You’re Not Getting the Tax Advice You Need?!

There’s an unspoken truth when it comes to tax advice: for business owners, there’s a complete lack of transparency from advisors over what tax advice actually is. This means as a business owner:

…..you don’t know what to expect from your accountant

…..you don’t know if you are getting all the advice you need

But isn’t ‘really’ anyone’s fault.

Tax advice is an incredibly complex area that hasn’t been set out as a universally defined and priced service before. Like say, bookkeeping. If you need bookkeeping, your accountant will ask you several questions about your business and give you a price based on the requirements of delivery.

Tax advice shouldn’t be any different but currently it is. Well it was until now….

Three Types of Service

We’ve devised a way to define our tax services to make them completely transparent and clear for our customers, and us too!

Our Tax Services are broken down into three areas:

Tax compliance

Helping you pay the right amount of tax that’s due; your year-end accounts and tax return.

Tax advice

Delivery of specific work or planning to improve your tax position, to make a future saving, or get cash back into your business e.g. making an R&D Tax Claim

Tax consultancy

Reviewing your overall affairs & motives and applying tax legislation to their situation, to see where you may benefit from advice in the future.

Most accountants will have a tax compliance service that is priced or built into their accountancy package services; with tax advice delivered and charged for as and when a situation arises.

Tax consultancy though?  This is a bit of an unknown. But it’s where the most value sits for you as a business owner.  Find out more about our tax consultancy services below.

Our Tax Services

At Tennick, we aim to be completely transparent with our pricing and recognise that as with accountancy services, the individual tax requirements of a business are very different.

At each stage of a business’ lifecycle, there are different tax service options to consider, to make sure you are paying the most efficient amount of tax.

Take a look at our tax services here.

Like What You See?

If you’d like to have a chat with us about our tax services and find more about what you could be doing, book a call below at a time that suits: Book a call

Planning for ‘The End Game’

Well, that title sounds a bit more sinister than I intended! 

You see, I recently completed an End Game Tax Diagnostic Review to check how I’m doing when it comes to my business’s tax efficiency. 

I’m in the unusual position that my personal income doesn’t come from my role as Founder of Tennick Accountants. I have a commercial building I own personally. That, along with a wider family residential property portfolio, gives me enough income to live off. 

But this leaves me with a sole focus of building up as much value as possible in my accounting business to prepare for the end game. And I’m super invested in the assets, people and clients that make up my business. In particular, I want to achieve the best possible growth for my team so that the future is bright for them. 

And one way to make sure I can support this from a tax perspective, as I mentioned earlier is by completing a Tax Diagnostic Review. 

So, a Tax Diagnostic Review is an enhanced tax consultancy service that delves deep into all the relevant tax advice opportunities for you and your business. This service is available to all clients, with different options depending on where your business is in its lifecycle.

The End Game Tax Diagnostic Review

I wanted to share with you my experience of completing the End Game Tax Diagnostic Review for myself and Tennick Accountants. The review focuses on the future, the end game, and succession and gives me a full 360 on my tax efficiency!

The review identified many areas to consider, but I’ve selected three areas that are most important to me. These are:

  • Succession planning: Passing on the Keys
  • Reward & incentivise employees: The Winning’s in the Giving
  • Company Share Option Plans: Building my Very Own Team of Superheroes!

Even though the end game is a long way away, I wanted to do this tax diagnostic so I can build on the value of the business and have a clear idea of the most tax-efficient options when the time comes. 

Succession Planning: Passing on the Keys

When it comes to this kind of end game, well, let’s just say I’ve done some thinking. 

I enjoy my work, but it will be nice to put my feet up in a few (well, many) years. That said, I’d like Tennick Accountants to live on, even without myself at the helm. In other words, they’ll come a time when I’ll be looking to pass on the ‘keys to the castle’ to someone else.

Now I’ve got a pretty clear idea of the most tax-efficient options here, so I can enact my succession plan in the way I want while still being commercial about it. 

My personal preference would be to hand over the keys to one of my kids, especially if they really step up and show their commitment to the family business. If that doesn’t work out, I’ve got my eye on a couple of people from within my team with excellent leadership potential. 

Then, there’s the altogether different scenario where I’m bought out by a larger accountancy brand, a merging or a sale. I want to be prepared in case this happens too, so I’ve started looking into the various taxation routes I can take there. In a nutshell, my strategy is to prepare for all eventualities. 

Employee Rewards & Incentives: The Winning’s in the Giving

Currently, I’m very happy with my team. They’re exceptionally talented and show up every day, giving their 110%.

All that said, I’m always looking for more ways to motivate, reward and incentivise my employees. Sometimes, I just want to show them that I simply care!

The goods news is that when it comes to incentivising employees, there are lots of benefits to choose from. Over the next year, I plan to explore things like a £500 pension allowance, trivial benefits and a cycle to work scheme.

Why the trivial benefits, you ask? Couldn’t you just buy each of your employees a nice scented candle for Christmas? While the pension allowance and cycle scheme might sound like more meaningful benefits, not everyone appreciates them. Remember, every employee is different. Not everyone wants a new bike or even bikes to work. 

Through a £50 voucher or a gift for under £50, you can offer a benefit that suits the whole team. It’s a nifty way of motivating your team, or just a nice gift out of the blue. More importantly, it feels a bit more personal than just bunging someone a bit of extra cash…or buying them a scented candle (you know, I never really understood those).

Company Share Option Plans: Building my Very Own Team of Superheroes!

All this talk about ‘The End Game’ reminds me of my favourite superhero franchise (points awarded to anyone who can name it!). Come to think of it, that’s how I really think about my internal team – a group of amazing superhero accountants protecting the assets of our hard-working clients.

In the case where I potentially pass on the business internally, then I’ll want to set up these incredible superheroes with a good company share option plan. 

Although I do have a preferred option for succession, I want to plan for any outcome, and one route could be to pass on the business internally. I’ve started by obtaining an advisory report for the most suitable plan for me and the business.  Taking this step means I’ll have a complete understanding of exactly how it all works, and I can plan carefully how to introduce shares into the business, should I decide to take this route.

I’m a fan of these schemes, though, as selected employees can benefit tax efficiently from the company’s growth. At the same time, the company remains protected from risk, if for some reason, we didn’t perform as expected. Now that’s some real superhero accounting right there!

Looking to the Future

At some point, there will be scope for an individual tax review when my property portfolio has grown a bit more. At that point, a few other things like CGT and IHT may come into play. But to be honest, this is very much for the future, as the end game is still a long way away for me.

However, there is one thing I “might” consider personally…well for my wife. She’s after a new vehicle, and she may go electric via the business for benefits. I’ve got to admit, my taste in cars is a bit too ‘gas-guzzling for it to be tax-efficient, so it doesn’t really make sense for me to get one via the company.  

What’s your end game plan? 

Well, there you are, that’s my end game. So what’s yours?

A tax diagnostic can help you identify tax opportunities you may not be aware of, allowing you to plan properly for the future, personally, for your family and business. 

Book in a call to find out more and see which tax diagnostic review is best suited to your business.

32 Ways to Get the Maximum Value out of Your Business

A question I get asked all the time is: ‘What can I take out of my business?’ and ‘how do I save more tax?’ Well, the quick answer is, ‘there’s up to 32 ways to get value out of your business, tax efficiently.’ Yep, that’s a lot of ways ⬇️ (checkout out the full infographic here).

But the truth is, not all these 32 ways will be relevant to you and your business, and it’s likely that you’ll already be doing a few of them. But how do you know if you’re maximising every opportunity you could be, to improve your life, your families and your employees?


Value Extracting Tax Diagnostic Review

Well, we have a tax diagnostic review service that will do exactly that for you.

In our Value Extracting Tax Diagnostic review we will analyse your business and personal circumstances against the 32 ways, to identify all the ways you can tax efficiently put things through the business, or take value out of the business, benefitting you, your family and even your employees.

Every business owner can extract loads of value from their business, you just need to know what is relevant for you.

Find out more about our tax services & pricing here.

Let’s have a chat

If you’d like to review how much value you’re getting from your business, we’d love to speak to you, book in a call & let’s have a chat:

Don’t blink you might miss it

Can you believe it, the first quarter of the financial year has passed and by gosh time has flown.

So, rather than waste any more time, click on the image above for a short video as to what we are discussing this month before you read on.

Watch the video here

Save me tax

We’ve previously shared the 32 ways to extract more value from your business whilst saving tax and recently introduced our “tax and growth discovery form” with a handful of clients as we gradually roll this out.

This form pulls out what matters the most to you in your business and helps identify where you are, where you want to be and then gives us the platform to see how best we get you there.

If you would like a copy of the form together with guidance as to how to complete this just click the button below.

Yes please, I’ll have a tax and growth discovery form

Make me more money

We keep mentioning the scary fact that only 1 in every 2,222 business owners exit their business when they want, with how much they want.

If you start planning ahead there now, get an understanding as to what your business is roughly worth if you sold it today and build out a road map to improve this, you will help beat the stats.

Yes please I would like a business valuation

Help me focus on what matters

Do you know who your top 10 customers are in terms of profitability?

Do you know what your top 10 supplier costs are?

Far too many business owners do not know the answers to the above two questions and when using cloud-based accounting software it is literally at your finger tips.

By then acting upon this information you can then start making decisions that increase the value of your business.

I don’t know but I would like to know

Improve my cash flow

It is interesting when you take a step back and reflect on how generations before us managed their cash and how times have changed; or have they?

A lot of the same problems remain but some of the old traditional methods have sadly been forgotten and whilst I am not suggesting we all go back to brown envelopes, jars or filling mattresses; the process is one where a lot can be learnt to make your current cash stretch further.

Head across to our website and read the blog whereby we share four tips around this that can be accessed here which clients of ours are already putting in place and it is literally changing their lives simply as a result of this same methodology.

Takeaways

  1. Ideally you need four plans in your business (all of which can drop out of the discovery form):
    • operational plan
    • financial plan
    • tax plan
    • retirement plan
  2. The day for planning your retirement was yesterday but today will have to do as tomorrow is too late
  3. Cash can go a lot further than you every imagined once you change the processes you use to manage it

Our wider impacts that you have contributed towards

Overall, we have now made over 2,119 “impacts” to date across 34 projects to date which for the month of March alone, including:

  • supporting young adult’s mental health
  • providing emergency relief support in Ukraine
  • 97 days of access to clean drinking water was provided
  • 4 days of housing being provided in Vietnam
  • helping fund business training programmes in Zimbabwe
  • 4 days of training in sustainable agriculture were given to villagers in Madagascar
  • 10 days of education were provided for children in the world

End of an era

So as many of you are already aware; furlough ends this month.

For many they will have already prepared but for some, we appreciate there might still have been a degree of uncertainty/hope that the Government might have something up their sleeve.

It certainly appears that unfortunately this is not the case and there is nothing to our knowledge in the pipeline.

If you remain concerned about this please do get in touch and schedule a call with your client account manager.

What else you might have missed?

  1. The Super Deduction Tax Relief came in earlier this year so don’t forget to take advantage of this in light of the pending budget announcements where we are expecting to start feeling more of a pinch again. More information about this can be found here.
  2. In case you missed it from April 2022 tax on dividend income will increase by 1.25% to help support the NHS and social care.
  3. The Autumn budget is currently scheduled for October 27th so we are expecting to find out a lot more then.

Again if you have any concerns regarding either of the above points or want to schedule in advance a call following the budget announcement schedule this with your client account manager there now.

Is it worth continuing in business in light of all of this?

Whilst you might think this a fairly blunt and negative question to ask, let us be honest, many people have felt that way at least at some point over the last 18 months or so.

So many have now though come out the other side and are even; in light of pending tax rises, repayment of Government-backed loans, fighting back and doing really well with some working towards an exit valuation figure they never before dreamed of that they would be over the moon with and which would see them nicely into retirement.

We will share more insights around exit strategies in our mid month newsletter next month but there is certainly lots to think about so please do get in touch if any of the above is something you want to discuss further.

Speak to the team about your goals and vision. We'll tell you how we can help you make them a reality.

Are you looking to work with a strategic accounting partner to help shape your business’s future? We’d love to hear from you