Pierce: As the financial year draws to a close, many businesses focus on pulling together their accounts and preparing for compliance deadlines. However, the most successful companies know that effective pre-year-end planning is just as important as year-end reporting itself. By taking a proactive approach in the weeks and months leading up to your year-end, you can optimise your tax position, strengthen your cash flow, and set a clear path for the next financial year.
Why should you be planning your year-end?
- Once your year-end has passed, what has been has been. You cannot go back in time to help manage tax liabilities. It’s often too late to make meaningful adjustments.
- You can help prepare yourself for what your tax liability is estimated to be, giving you more time to plan to help pay and manage cash flows – no nasty surprises!
- Year-end planning can help ensure the smooth running of your year-end, which can facilitate tenders, mortgage applications, and improvements to your credit rating.
- Year-end planning and tax planning can ensure we can make the best use of allowances and tax bands available.
- A clear financial picture gives the ability to set realistic budgets and growth targets for the next financial year.
Corporation tax and considerations
- Losses: Are there any earlier-year losses available for use this year?
- Taxable Profits: Are your profits going to exceed 1.5 million, and therefore, payments on account will need to be considered?
- Lower Profits: Does your business qualify for the lower rate of corporation tax by profits being below the £50,000.00 threshold?
- Tax Rate: The main rate of corporation tax for most companies is 25%.
- Pensions: Contributions to staff or directors’ pensions are wholly a tax-deductible expense.
- Directors: Are the directors of the company structuring their pay correctly? Unmanaged drawings can find directors falling subject to an overdrawn loan account, which can be a costly affair!
- Provisions: Have I assessed my stock, bad debt and any bonuses due and provided for them within my accounts?
Personal tax and considerations
- Allowances: Are you utilising all the allowances given to you, such as dividend allowance or savings allowance?
- Working from Home: Are you using your home as an office? Could you qualify for home as office relief?
- Structured Income: Have you structured your income in the most tax beneficial way between salary and dividends?
- Your Spouse’s Income: Does your partner receive a low income? Could you benefit from the Marriage Allowance?
- Exit Strategy: Do you have an exit strategy set up? Planning exits early to make full use of Capital Gains Tax Reliefs.
- Pensions: Have you maximised pension contributions?
Questions you may want to ask yourself:
- Company pension vs. personal pension contribution?
- Bonus vs dividend?
- Capital investments – do you need to make any? Are there any capital allowances you could make use of for these?
- Has my bookkeeper been claiming all allowable business expenses?
- Are you using tax-efficient vehicles through the company?
Tax shouldn’t be about loopholes, it should be about being prepared, planning and being proactive!
How can Pierce help?
Pre-year-end planning is not just about compliance; it’s about taking control of your financial future. Our experienced team can work with you to review your accounts, highlight opportunities, and implement strategies that ensure your business is well-positioned for both tax efficiency and long-term growth.
If your year-end is approaching, now is the perfect time to speak with us. A conversation today could make a significant difference to your bottom line tomorrow.
Contact the team today by calling 01254 688100 or emailing enquiries@pierce.co.uk
