Prevention is better than cure!
Prevention is better than cure! – A saying that can often apply to reducing your tax bill.
Taking a proactive approach to your accounts can often be the simplest way to save you tax in a number of ways, for example:
Annual Investment Allowance (AIA)
The AIA allows you to claim 100% of the cost of assets, such as plant and machinery, in the first year of purchase, which in the past would have been split over a number of years. The AIA does have limitations on how much can be spent each year, therefore purchasing an asset just before or just after your accounting year-end could provide a completely different outcome on your taxable profits.
Capital Gains Tax (CGT)
Everyone has an annual allowance for capital gains before they are liable to CGT, and if you are planning to sell items such as shares, etc., that may incur a capital gain, the timing of your disposals could greatly effect the outcome of your CGT position.
Becoming a Limited Company
Though many people still view becoming a Limited Company as something associated with larger businesses, often the incorporation of a much smaller business can still prove to be beneficial for tax purposes, and with less extra administrative cost than you may expect.
Unfortunately, Inheritance Tax planning can be a difficult subject to think about. More often than not, the majority of a person’s wealth is tied up in the property they own rather than money in the bank, and, as such, is unlikely to be spent during the retirement period. The writing of your Will, therefore, should not be the only thing to consider when deciding how your legacy should be allocated.
Submitting monthly VAT returns
If your business provides a product or service that is zero rated or exempt from VAT, whilst your expenditure does incur VAT, you may wish to improve the cash flow of your business by recovering your VAT on a monthly basis rather than once a quarter.
There are many reasons why we, as accountants, and you, as clients, should aim to be proactive when dealing with your financial affairs, and the aforementioned are just some of the more widely relevant reasons.
At Green and Co we regularly provide our clients with advice on these matters and more.
Being proactive is something that we strive to achieve so that our clients can make the right decisions from a position that is most tax efficient for their individual situation.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.