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new tax year resolutions

Ready to make resolutions for the new tax year?

The end of the current tax year is only just over a week away. Therefore, it’s time to examine your present situation and identify potential tax-saving opportunities for the next.

Failing to act at all could result in you paying more tax than is necessary, or forgoing contributions to your pensions, savings and investments. 

Taking a proactive approach can help you to ensure that your affairs are handled in a tax-efficient manner going forward. 

Here we run through a few of the resolutions we think you should consider ahead of the new tax year…

Use allowances within the tax year

Consider whether you have properly utilised the allowances available to you for the 2018/19 tax year. If you know you haven’t, begin to think about how you intend to do so in the next tax year. This can be key to reducing your tax liabilities and maximising net income, capital gains and wealth.

Here, we summarise some of the better-known tax-free personal allowances that you should be aware of*:

*This is not an exhaustive list.

Allowances can sometimes be overlooked, since in isolation they may seem insignificant; however, when combined, they can generate real tax-savings.

Claim expenses

Your profit is typically the income you receive, less any allowable expenses incurred during the course of running your business. 

This final figure will determine your Personal Tax and National Insurance Contribution (NIC) liabilities.

Claiming the correct expenses can help you to optimise your tax position, whilst ensuring that you operate within HMRC’s rules.

HMRC will only allow you to claim tax relief on expenses which are ‘wholly and exclusively’ for the benefit of your business. 

You may encounter some expenses that have both a business and a personal element; as a rule of thumb, you should only claim the proportion that relates to the business.

When undertaking tax planning, establish what allowable and disallowable expenses are in relation to your own circumstances.

You should also consider what records you need to maintain, to ensure any claims can be dealt with efficiently.

Understand tax reliefs

As we head into a new tax year, resolve to improve your awareness of and better understand the tax reliefs that are available to you and how they can be used to achieve your business goals.

The uncertainty that businesses are currently facing is leading many to tighten their belts and exercise more caution day-to-day.

Tax reliefs, when utilised effectively, can help businesses to overcome this. However, many are simply not capitalising on any number of the tax-saving opportunities offered by the Government.

This may be because of a lack of awareness, first and foremost. However, it is often also because businesses do not believe that they can be a ‘key driver’ for growth.

Going forward, consider tax not just as a ‘necessary evil’ but as an aid to grow your business. When planning, prioritise it rather than addressing it when it is already too late.

Pensions contributions

If your pensions input exceeds your annual allowance, you may be charged tax on the contributions over and above this.

In some instances, you may be able to defer this payment to your pension’s provider. However, they must be notified before 31 July.

This is something you should be aware of when undertaking tax planning. If you do not notify the appropriate parties ahead of 31 July, you must make the payment yourself.

MTD – “Must Think Digital”

The new tax year comes just days after the implementation of MTD on 1 April. As such, you should consider the use of cloud accounting software within your business.

From next week, VAT-registered business turning over £85,000 or more will need to make quarterly digital VAT returns and maintain digital records using HMRC-compatible software.

Not only will relying on out-of-date systems and technology potentially leave you falling foul of the new regulations, but such systems are also not conducive to running a competitive business in today’s market.

If you are within the scope of Making Tax Digital for VAT (MTDfV), now is the time to take action and make the necessary preparations in order to comply with the new rules.

The 1 April implementation date aside, the Government suggests that digital returns could be required for other taxes further down the line, if Making Tax Digital for VAT (MTDfV) proves to be successful.

In light of this, we would certainly encourage businesses to consider how they can embrace technology and new solutions, to future-proof their business, going forward.

Be organised

It may sound obvious but being organised is key to maximising any potential tax-saving opportunities in the coming tax year.

If you know that every year you miss out on said opportunities because of misplaced paperwork and mass confusion, now is as good a time as any to make a change!

Keeping your affairs in order will not only deliver improved tax-efficiency but may also improve efficiency throughout your business.

Diarise deadlines

Diarising any important deadlines that you are required to meet in the next 12 months, whether it be submitting your self-assessment tax return to HMRC, or filing paperwork with Companies House, can help you to stay organised.

Failing to meet key deadlines can have an adverse effect on your business and leave you facing costly penalties.

It’s important to also bear in mind that, even though your agent, adviser or accountant may be submitting or filing information on your behalf, that ultimately the company’s directors will be held responsible for any errors or delays.

How can George Hay help?

Whether you have a fledgling start-up, an established business, or the beginnings of a sound entrepreneurial idea that you dream of bringing to life – our professional team of chartered accountants can work with you and help you to realise your ambitions.

At all times, not just now, planning is vital if you are to ensure that your affairs are handled in a tax-efficient manner. Discussing your upcoming plans with a tax advisor or accountant could help you to significantly reduce your liabilities.

If you’d like to talk to one of our team about effective tax planning, no matter what stage your business is at, please contact us today at one of our offices in Biggleswade, Huntingdon or Letchworth, or fill in one of our online enquiry forms.

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