The new tax year will start on 6th April 2018. Tax years are normally referred to by the two years that they span over, so the new tax year will be “2017/18” and when you’re running your own business, the start of the new tax year can be a great time for some spring cleaning, here are our top tips on how to get your business ready for the new tax year…
If you have yet to issue any invoices to customers, now is a great time to catch up. Unless you’re using the cash-based method for simplified accounting, you have to include your income in your accounts when you earn it, not when you invoice for it or are paid for it, so there’s no disadvantage from a tax point of view to issuing your invoices before the end of the tax year.
Make sure you’ve tracked down all those fiddly little receipts and included in your accounts as many of your out-of-pocket expenses as you can claim tax relief on. Don’t forget expenses for which you haven’t paid actual physical cash, such as mileage travelled in your own car, or business use of home. It’s worth tracking down even the smaller expenses (items less than £10) that many small business owners aren’t claiming them for tax relief.
Now is a great time to check if what your books say is in your bank is the same as the balance on your bank statement. If not, then you should find the missing, wrong, or duplicate transactions and put it right. This is important because if you don’t have an accurate picture of what’s going in and out of your bank, you may find yourself running out of cash if you spend money you don’t have, or if you get a visit from a HMRC inspector then they may fine you for inadequate record-keeping!
You can also use the end of the financial year to save tax now! If you’re preparing your business’s accounts to 5th April, and you’re planning to buy a piece of equipment for your business soon, such as a new computer, then buying it before the end of your accounting year rather than after means you’ll get the capital allowances on that asset a whole year earlier. Also, don’t forget your personal tax. Have you used as much as you can of this year’s ISA allowance? What about pension investments or donations to charity? Remember to keep a note of all these points that could save you tax!
So start your spring cleaning for the new tax year now