Reducing tax liability

gutteruu

My wife is a self employed marketing consultant. She has recently submitted her first years accounts. Total income was about 13k, after expenses her net profit was 8k. Tax on this was C. 2k.

Given there is only 4 weeks left in the year, can you suggest anything to reduce this liability down. I was thinking about her car. She does use it for business periodically. We already claim for some diesel and tax. Would it be worth buying a car through the company? Leasing? Any other ideas?

davindub

gutteruu wrote: »

My wife is a self employed marketing consultant. She has recently submitted her first years accounts. Total income was about 13k, after expenses her net profit was 8k. Tax on this was C. 2k.

Given there is only 4 weeks left in the year, can you suggest anything to reduce this liability down. I was thinking about her car. She does use it for business periodically. We already claim for some diesel and tax. Would it be worth buying a car through the company? Leasing? Any other ideas?

You say company but the 2k wasn't corp tax? Are you talking about IT tax paid on her salary or sole trader?

Anyway, better to sit down with an accountant rather than asking for ideas online with little relevant details. But I would suggest incurring additional expenses to reduce tax is not going to increase the income earned by your wife.

thegolfer

Pension all the way.

No point in spending on other expenses, in order to reduce a tax liability.

If it's a company it has to be paid out in the year, no accruals allowed.

If sole trader then you have up until October 2020.

Edit.
If it's a company try the 500 tax free vouchers, no BIK on director.

Mrs OBumble

It's last year's return which she has submitted, so there is virtually nothing she can do to reduce the liability at this stage, because the year is over. (I'm aware that personal pension contributions pad this year can be claimed against last year's tax, but thought that the cash needed to be received by the pension company by 31 October / when the return was submitted).

thegolfer

Mrs OBumble wrote: »

It's last year's return which she has submitted, so there is virtually nothing she can do to reduce the liability at this stage, because the year is over. (I'm aware that personal pension contributions pad this year can be claimed against last year's tax, but thought that the cash needed to be received by the pension company by 31 October / when the return was submitted).

If she is self employed then no scope for reducing the 2018 tax liability.

Pension Contribution can be paid up to the online filing deadline about 12 November.

A lot of people are not sure if they are a company or self employed so op to clarify the position.

gutteruu

Sorry, I should have said it's for 2019 I am wondering. We submitted last year's accounts and tax bill was 2k. So assuming nothing changes the bill will be the same for 2019 (or more) unless something changes.

Her corp tax was 2k and after income being jointly assessed with myself her total tax bill was 2k.

She is currently paying back a car loan, so I just thought if this became a company loan, some of this could be put as an expenditure on her company reducing corp tax bill.

As you can see I know nothing about business (and thanks for your patience) so any advice to reduce this 2k+ bill would be great.

TheCostumeShop.ie: Ronan

gutteruu wrote: »

She is currently paying back a car loan, so I just thought if this became a company loan, some of this could be put as an expenditure on her company reducing corp tax bill.

This would likely invalidate her insurance if it was insurance for personal use only. At 8k annual income she wouldn't have any income tax, so I'm guessing she's a company and paid 13% prelim. (13% corp and 13% prelim = 26%).



Talk to an accountant.



As someone mentioned All4One gift card as a Christmas reward of 500 is the only likely allowable. Regardless of income everyone should have a pension plan in play.

mickdw

She can claim a portion of her private car use as a self employed person. Look into the requirements.

JohnRock

If she's working from home she can also expense a portion of her rent, light and heat.

Gloomtastic!

JohnRock wrote: »

If she's working from home she can also expense a portion of her rent, light and heat.

In Ireland you can't claim rent/mortgage (I used to do this in the UK). It raises income tax issues so they just don't allow it.

JohnRock

Gloomtastic! wrote: »

In Ireland you can't claim rent/mortgage (I used to do this in the UK). It raises income tax issues so they just don't allow it.

I think you can expense a portion of your rent, maybe not your mortgage though. I found a link on revenue.ie here (at the bottom of the page) from this article