6th April is a fresh start for all businesses. The close of the previous tax year, and the beginning of a new one, provides the perfect opportunity to think about how you can boost your profits.
Join us as we detail how you can make this tax year your highest yielding one yet.
Know the tax changes
Personal tax allowance rarely stays the same year-on-year. For the 2019-20 tax year, it increases to £12,500. This therefore adjusts the basic and higher rates band too – the former to £12,501-£50,000, and the latter to £50,001-£150,000.
The self-employed Class 2 National Insurance contributions are changing also. The 2018-2019 tax year charged £2.95 a week when earning over £6,205, but the new 2019-2020 tax year sees them occur £3 weekly with income above £6,365.
If you’re the director of a limited company, you can earn more tax-free money by listing yourself as an employee and taking a salary. Plus, you’ll also be able to receive more income before Class 1 National Insurance contributions are due, as the amount required has risen from £8,424 to £8,632.
Consider a VAT scheme
Whether you’re a limited company or not, you can take advantage of registering for a VAT scheme. This becomes mandatory if your SME’s turnover reaches £85,000, however you can also voluntarily enrol if the earnings reflect an amount below this.
This means that you’ll be able to benefit from claiming back any VAT you pay. There are a few different VAT schemes you can choose from, one of which is the Flat Rate scheme. This is accessible for those SMEs with turnover below £150,000 annually, and simplifies the work required in working out the VAT.
Registering for VAT may require you to submit your VAT returns digitally. If you’ve voluntarily enrolled rather than having turnover above the threshold, then it won’t be mandatory. However, if your earnings do surpass £85,000, then unless you have a reason to apply for exemption, it will be compulsory.
Employ tax software
Digitalising your VAT, along with other types of tax, will help you to be more tax efficient. It allows you to input information throughout the year, rather than having to file a cumbersome amount of data at an inconvenient time. On top of this, it’s all filed in the cloud, so you won’t ever lose your tax information. Cloud accounting software also reduces the chance of errors, meaning you can be rest assured of compliancy with HMRC.
For ultimate peace of mind, it’s a great idea to use the services of an expert accountant, like Nabarro Poole. We’re well versed in cloud accounting software, having employed it for almost a decade. As the tools change, we adapt our processes to them to ensure your accounting is never left behind.
In addition to modernising your accounts, we can assist with making this tax year the most profitable one yet by helping with other aspects, like management of accounts and tax planning. Get in touch via our contact form to guarantee flawless accounts.