For most of us, the 31st of March will be the end of our 2014 financial year. We hope it’s been a successful, happy and profitable one for you and your business! Here are some tax tips and helpful information to ensure a smooth end of year process for you.
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End of Tax Year Obligations – What do I need to do?
If you have a Limited Company, every year you must prepare full statutory Annual Accounts. Following that, you also need to send Accounts to Companies House, send a Company Tax Return to HMRC and pay any Corporation Tax that you owe (or tell HMRC that you don’t owe any). If it’s your first year as a company, or you’ve restarted a dormant company, there are a few additional bits and bobs you need to be aware of. Give us a call and we can take you through them.
The following filing deadlines apply for private limited companies:
If you’re a Sole Trader, things can be slightly simpler. You’ll need to do a Self Assessment Tax Return each year, as well as pay National Insurance and Income Tax on any profit your business makes.
Keeping on top of your accounting during the year, with a good system (like Xero) and regular reconciling, makes your year end process a whole lot easier. Plus, if you’re on our Sidekick accounting service, you can relax knowing that we take care of all your compliance obligations for you!
Planning on Buying any Assets?
Thinking of buying a new laptop before the end of the financial year? The Annual Investment Allowance lets you claim tax relief on 100% of the cost of qualifying assets up to £250,000. This can be a great help in reducing your tax bill. However, not every asset is covered by this unfortunately (e.g cars don’t qualify), so please give us a call before you hit the high street.
How about Selling anything?
If you are thinking about selling off an Asset for a bit of cash, don’t forget you will need to pay Capital Gains Tax on the profit. If that doesn’t sound ideal right now, wait until April to sell then you’ll have another whole year until the Tax is due.
However if you are planning to sell a lot of assets for a profit next year, it actually might be better to start acting now. This is because each year, every individual gets an annual exemption that they can set against capital gains. This was £10,900 for 2013/2014 and £11,000 for 2014/15. If you think you could go over that limit next year, you might want to start spreading your sales between the two different tax years. That way, you’re sure to make best use of your annual exemptions.
Making Use of Tax Breaks
Utilise your Annual ISA Allowance! Currently, you can invest up to £11,520, of which £5,760 can be in a cash ISA, tax free. Any interest, dividends and capital gains on these investments are tax free. This allowance can’t be carried forward so if you don’t use it, you’ll lose it. Keep in mind this allowance is set to increase in April 2015, as covered in our Key Points from the Budget 2014 Blog.
If you’re aged between 16 – 74, you can also invest up to £25 a month in tax exempt savings policies issued by friendly societies.
Why not put some money aside for retirement? You can get tax relief when you contribute to a pension. Speak to one of our Sidekick Accountants if you want to do this, because there are some rules around tax avoidance in this area.
If you want to invest in someone else’s business, consider investing in shares under the Seed Enterprise investment scheme. You’ll be up to gain some tax relief by doing this.
Timing your Expenses
Tax is never simple, even at the best of times. But by timing your sales and purchases carefully you can keep the tax man happy as well as potentially lowering your tax bill.
If you have any genuine business costs coming up soon, you should look at incurring them in March rather than in April. That way, you’ll get the tax relief on those costs a whole year earlier. Don’t forget, expenses go into your business accounts when they’re incurred, not when you pay for them.
We hope these tax tips help you have a smooth end of financial year!
Still confused? Too busy? Running out of Time? Give us a call for some proactive, friendly and helpful accounting services from the djca Sidekick team.