2022 is well underway, but there’s still another new year to come yet, and that’s the new financial / tax year, this article will cover the 5 Top Tips for Preparing Your Business for a New Tax Year.
The current tax year ends on 5th April, and the new one starts the next day on the 6th. This date will usher in the latest changes in a number of taxes, benefits, and allowances – and it’s important that your business is prepared for this, to ensure a smooth transition, and the ability to conduct business as normal, with the minimal amount of fuss.
Each year the Government creates their annual budget, and announces the various changes to tax rates, and tax codes, benefits, and allowances, etc. They also review the National Minimum Wage, as well as the National Insurance threshold and rates.
With the impact of the COVID-19 pandemic still having a lasting impact on the country, NICs (National Insurance Contributions) will increase until April 2023, when the 1.25% increase will be replaced by the Health and Social Care Levy.
It’s important that you’re aware of what rates, taxes, and reliefs are changing, but it’s just as important to get your business ready to handle the adjustments in your accounting to ensure you remain compliant.
To help you prepare for the upcoming changes in the tax year, we’ve put together our 5 Top Tips for getting your business and your accounts ready.
Check Your Accounting and Business Software
There’s a wide variety of accounting and business software available for individuals and companies to make use of, as well as the option of using spreadsheets with built in calculations and formulas.
As the end of the tax year approaches, you should check your software and make sure that the newest figures, percentages, and deductible amounts are correctly inputted in; and if you’re making use of a manual spreadsheet, then it’s vital that you go through each column and look to see if the figure has been changed for the next tax year and adjust where required.
Has your business changed size over the year? Bigger or smaller, it’s important to look at your figures and determine if the size of the business has remained the same – this is because there are different reliefs and benefits available that often have financial eligibility requirements, and you might find that you’ll be moving into a different tax bracket for the next year – which can come as a nasty shock if you’re not prepared for it.
If your business has grown in size, and is approaching the £85,000 VAT threshold, it may be beneficial to register for VAT.
If your business has assets that need replacing or disposing of, the timing of doing so can make a difference in your tax bill, and if you miss the opportunity just before the end of the tax year, it could cost you a reduction in your taxes.
There are some dates which are fixed, and the same every year – such as 31 October being the deadline for paper-based Self-Assessment Returns, and 31 January the deadline for everyone else. But there are also some deadlines that are specific to your financial and accounting year – for example, the payment of Corporation Tax, which could see a company required to pay their first instalment within 6 months and 13 days after the first day of their accounting period.
Dates that you might need to jot down could include:
By working out what you’ve got to do, and giving yourself plenty of time to do it, you’re not going to be caught off-guard and risking penalties or legal issues.
No one wants to be charged fees or penalties, but failure to submit required documents, reports, or returns on time can lead to them, and although HMRC often make use of fixed penalties, they are also known to charge interest on amounts owed – which escalates and increases over the amount of time a bill is outstanding.
To keep your business compliant, and your payments and dividends paying out on time, it’s important that you check your obligations, and ensure you not only know when the deadline is, but also for what format it takes – as paying by cheque, for example, has an earlier deadline than paying via bank transfer or other digital formats.
The end of the tax year can get extremely busy, especially with the number of forms your business may need to complete, this is especially true for companies operating PAYE schemes, and have to get the P60’s across to their employees.
It’s advisable to either go through your business, or have your financial advisor do so, and make a checklist of all the different reports and end-of-year payments that are due, when they’re due, and how they need to be reported or paid.
Then you’ll be able to keep track of what you’ve got to do, what’s been done, and what needs priority action to ensure you’re hitting all your deadlines in time.
These are only a few of the different areas in which businesses may need to prepare ahead of time to remain compliant with the law and HMRC requirements, and to ensure there’s no disruption to payroll or accounting.
If you’re not sure whether you’ve got everything covered in terms of Preparing Your Business for a New Tax Year, or want some help managing your End of Year responsibilities and obligations, our experts are available to provide expert advice, consultation, and the service you need to keep your business running smoothly, so why not get in touch?
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