Corporate planning financial

Five areas business owners should think about at the start of the tax year

Most business owners have probably already made the most of their tax efficiencies for this year, but booking an appointment now can help you to be prepared to make new decisions in April in order to make the most of the tax year. Usually the earlier in the tax year you can make these important decisions the better. Here are the five areas we would suggest thinking about.


Pensions are a great way of making the most of tax efficiencies as a business owner, but many people are still not aware of the new changes. If a business owner earns less than £150,000, the annual pension allowance is currently £40,000 per year. So, that is £40,000 you can put into your pension and reduce tax liabilities overall. You need to be aware of the minimum limits for higher earners and the lifetime allowance which is currently £1 million. An advantage which many business owners are not aware of, is the ability to carry forward any unused allowances from the previous three tax years. Your individual circumstances need to be assessed but you should be making sure you maximise your pension tax efficiencies as much as is possible for your individual needs.


It may sound obvious but for many business owners as higher rate tax payers, utilising your ISA allowance is the first point of call. The limit for the 2016/2017 tax year is £15,240 but this increases to £20,000 for the 2017/2018 tax year. The earlier you invest in the tax year the more time you have to benefit from the potential growth on the investment, however many people will wait until later in the year to sort out their ISAs. Booking an appointment now before the end of the tax year, can help you to ensure you make the most of your allowances from the 6th April.

Relevant Life Cover

If you have not already considered protection and the benefits it could bring for your company, doing so at the start of a tax year is not only easier but more tax-efficient.

One of the areas we discuss with business owners is Relevant Life Cover. This can be useful where a small company does not have enough employees to set up a group ‘death in service’ scheme and wants to provide life cover for an employee or director. This product is not available to sole traders or partnerships.

With a Relevant Life Policy, the proceeds go to a named beneficiary of the employee – unlike Key Person Insurance where the insurance is for the benefit of the company.

Life insurance premiums are paid for by the company and usually work on a multiple of salary basis. If the employee or director covered passes away, during the policy term, the insurer will pay the sum assured into a relevant life trust and this will be distributed to the employee’s beneficiary(ies).

Relevant Life is a qualifying business expense and so there can be considerable cost savings when it is paid for through the business. It reduces income tax, national insurance and corporation tax liability and the cover does not count towards annual or lifetime pension allowances.

Key Person Protection

If there are key people that the business relies on, then Key Person Protection may be useful. It is owned by the business and the payout is for the benefit of the business to enable trading to continue and a replacement member of staff to be recruited and trained.

If you take out a Key Person Insurance policy it will pay out a lump sum to your business should the person insured die or be diagnosed with a critical illness. You must always check what conditions your insurance covers before going ahead.

Premiums can be paid for by the company and are tax deductible as long as certain criteria is met. Each case should be considered on its individual merits about whether this is right for the company and how it is set out to consider tax liabilities such as inheritance tax in the long-run too.

Share Ownership Protection

Planning for the future in a business is essential. If shareholders become ill or pass away, then a business can often be left in a vulnerable position dealing with beneficiaries and trying to come to agreements. This can often cause delay and effect the day to day running of a business. If the shareholders plan ahead by taking out Shareholder Protection, then the lump sum would allow them to purchase the necessary shares and remain in control of their business.

If you would like to discuss any of the considerations above, please speak to one of our friendly team to book a free initial financial review or an on-going review with your existing adviser if you are already a client. Call us on 0333 456 0333 or email

This content is for information purposes only and does not constitute a personal recommendation. Tax rules have been based on current tax legislation and further tax advice should be sought on an individual basis before any action is taken. The Financial Conduct Authority does not regulate tax, will and estate planning.