If you own a small business, it may seem like every season is tax season, but to avoid sleepless nights as the end of the financial year approaches in April it’s even more important to keep on top of your tax affairs. Check out our list of preparations to guarantee your business glides smoothly into the next tax year.
Make a note of key dates
April 1 2023 is the start date for a number of changes which were detailed in the autumn statement. Business rates are changing following a government review, and the new energy support scheme begins. There is an increase in the national minimum wage, and if there are young people in your workforce you must ensure you pay the correct age-related amount:
- For those aged 23+ it increases from £9.50 to £10.42
- For those aged 21-22 it increases from £9.18 to £10.18
- For those aged 18-20 it increases from £6.83 to £7.49
- For those under 18 it increases from £4.81 to £5.28
- The apprenticeship wage increases from £4.81 to £5.28
April 6 2023 is the start of the new tax year, and there are various tax changes you will need to be aware of as a small business owner. These include:
- The additional income tax threshold will be reduced from £150,000 to £125,000 but the personal allowance of £12,570 has been frozen until 2028
- Tax-free dividends allowance will be reduced to £1000
- Capital gains tax allowance will be reduced from £12,300 to £6000
In addition, you will need to update your employee payroll records for the new tax year.
April 19 2023 is the date by which you should submit your final Full Payment Summary and Employer Payment Summary for the year ended 5 April 2023, and pay any NI contributions and tax due for that year.
May 31 2023 – by this date you’ll need to give a P60 to all employees who were working at your business on the last day of the tax year.
Ensure your accounts are in order
You may be super-organised and have to hand all your customer invoices, expenses receipts and records of bills you have paid; in reality many people fall short of this ideal through sheer lack of time. To avoid last minute panic, specialist accounting software such as Sage or Xero can integrate with your business bank account and help you keep track of important documentation. It can be customised specifically for your business and makes end of year tax preparations much more straightforward for small businesses.
Here at AMR Bookkeeping Solutions, our qualified and certified team can train you on using bookkeeping software, including Sage and Xero. You can find out more about this here.
Examine your business budget
Your business budget is an estimate of future income and expenditure over a particular period, usually a year. It’s sensible to revisit it on a regular basis and at the end of the tax year it can help tie your tax liabilities in with your future goals and growth plan. An end-of-year accounting checklist means you can look back over last year’s budget, see how accurate your forecasts were and use this information to plan for the following year.
Check and confirm your tax obligations
Your business’s structure and turnover will dictate the type of taxes you pay and how you pay them. For example, if your business is a limited company you will be liable for Corporation Tax, but not if you operate as a sole trader or partnership. You can get more information about this on the government’s website here.
If your business’s annual taxable turnover exceeds £85,000 then you have to register for VAT. Businesses with a turnover of less than this can choose to register voluntarily for the benefits this can bring.
If you run your business from an office, warehouse, shop, or any premises other than your home, you will be charged business rates on the property. Business rates are calculated by your local authority and you will usually receive an invoice in February or March with details of payment due on 1 April; to spread the load, you can split the bill into monthly payments. If you run a business from home, however, you can still be charged business rates, for example if you employ staff who work there with you. You can check the HMRC business rates on the government’s website here.
Penalties for tax return errors can be severe so it’s important to ensure compliance by meticulous fact-checking.
The tax season needn’t be a nightmare. At AMR Bookkeeping Solutions our experienced and approachable team will help you get through it with your sanity intact. Call 01892 559480 or contact us using our online form.
