As we approach the much-anticipated festive break, many of us will be focused on turkey and tinsel, but equally of importance is looking ahead to a new year.
No one wants to pay more tax than they are required to, and yet each year many businesses do because they fail to take advantage of tax reliefs or do not take the right steps to monitor and minimise their liabilities.
To kick off 2024 the right way, here are our Twelve Days of Tax Tips to make your year merry and bright.
Day 1 – Keep accurate records
You must maintain accurate financial records for your business and submit them, as required, to HM Revenue & Customs.
For most companies, this will mean completing the CT600 Corporation Tax form, which will outline your income and highlight any reliefs you might be eligible for.
If your business is VAT-registered, you must also submit quarterly reports using HMRC’s Making Tax Digital system.
It is, therefore, important to keep track of all your business expenses, like office rent or business insurance, with receipts and invoices to act as evidence.
Day 2 – Review new tax legislation
Tax laws and regulations are always changing so, to stay informed, subscribe to HM Revenue and Customs (HMRC) newsletters and consult with qualified accountants to ensure you’re on top of any changes.
The next 12 months may be subject to substantial change from the Chancellor during his Spring Budget – especially as the UK heads towards a general election.
Day 3 – Claim all allowable expenses
Claiming all allowable expenses, such as office expenses, can dramatically reduce your tax liabilities, leaving you with additional surplus.
However, understanding what is and isn’t an allowable expense is key. The Government’s latest guidance can be found here.
Day 4 – Consider the Flat Rate VAT scheme
If your business’ turnover is below £150,000 per annum, you might benefit from the Flat Rate VAT scheme.
By simplifying your VAT calculations, you will pay a lower VAT rate and will know what percentage HMRC will take, securing you for future payments.
Day 5 – Explore R&D Tax credits
If your business is involved in innovative activities or product development, you might qualify for R&D Tax credits, which can provide important Corporation Tax relief by offsetting qualifying costs against profits – up to 186% for SMEs.
The R&D tax rules have changed substantially in the last year and are due to change again in 2024, so whether you have claimed or not before, make sure you get the latest advice.
Day 6 – Employee Allowance
You can reduce your business’ National Insurance contributions by up to £5,000, if you are eligible for Employment Allowance.
This applies to most employers whose Class 1 National Insurance liabilities were less than £100,000 in the previous tax year and can be claimed through your payroll processes or via HMRC.
Day 7 – Annual Investment Allowance (AIA)
AIA allows you to claim 100 per cent tax relief on qualifying capital expenditures up to the current limit of £1 million.
You can deduct the full value of an item that qualifies for AIA from your profits before tax; read more here.
Day 8 – Capital Allowances
The AIA is just one of several Capital Allowances that can help you reduce your Corporation Tax liabilities.
These reliefs can be claimed against qualifying assets that assist your business’s success.
The Full Expensing allowance was recently made a permanent Capital Allowance and should be explored if you haven’t used it before.
Day 9 – Incorporation
By incorporating your business to become a limited company, you will pay corporation tax on your profits rather than your own income tax.
As a result, you might be able to start pay yourself a salary and dividends to minimise your personal tax bill as a director.
Day 10 – Small business rate relief
You can reduce your business rates, only if your property has a below £15,000 rateable value.
Contact your local council to check if you are eligible and if you can receive additional types of business rates relief.
Day 11 – Plan ahead
Always review your expenses and revenues regularly and forecast your cash flow for the new year.
Acting early can identify any potential problems before they happen and can offer the correct action.
Day 12 – Seek professional advice
The complexities of tax can be tricky to navigate but we can help you put an effective tax plan in place for your business to make sure you make the most of the money your business earns.
Get in touch with us today.
