As we approach the end of the tax year (5th April), it's crucial to review your financial situation and make the necessary adjustments to optimise your tax position.
Here’s a guide tailored for self-employed professionals to ensure you're fully prepared.
1. Keep Accurate Records:
Ensure your income and expense records are up to date to make the Self-Assessment tax return process as smooth as possible. The sooner you provide your records to your accountant the sooner you can plan the impact of your tax payments on your cash flow.
2. Claim Business Expenses:
Claim all allowable business expenses to reduce your taxable profit. This includes office costs, travel expenses, and equipment.
If you are using your personal car for business travel, are you claiming mileage instead of fuel? Have you claimed work from home costs? There are many allowable expenses you may not have considered, so be sure your accountant fully understands your business so that all relevant expenses can be claimed.
3. Consider Pension Contributions:
Contributing to a pension can provide tax relief, as it reduces your taxable income. You can contribute up to the £60,000 allowance each tax year without paying tax.
4. Review Your Payments on Account:
Check your payments on account and adjust, if necessary, based on your current year's income. This follows on from maintaining accurate records, as the sooner you have an accurate view of your finances for the year the sooner you can amend your payments.
5. Explore Tax Reliefs:
Check if any available tax reliefs such as the trading allowance (a flat deduction of £1,000 if your costs are less than that) and the annual investment allowance for any capital expenditure are available for your business.
6. National Insurance Contributions:
Ensure you have paid the correct amount of National Insurance Contributions (NICs). Class 2 NICs count towards your State Pension and other benefits, while Class 4 NICs are based on your profits.
You can check your National Insurance record and top up any gaps if necessary or query gaps that should not be there, to ensure you're on track to qualify for the full State Pension.
IMPORTANT NOTE: Currently you can go back as far as 2006 but after 5th April this will be reduced to the last 6 years, so act now to ensure you don’t miss out.
Navigating the complexities of tax year-end can be daunting, but with careful planning and consideration, you can optimise your tax position.
At Drury Accountants, we are here to help you every step of the way. Contact us today for personalised advice and support.
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