Reducing your tax bill
Tips for reducing profits and tax at your accounting year end
There are a number of legitimate ways in which you may be able to reduce your profits and therefore reduce or defer your tax bill. This list of tips has been put together as a general guide. For specific advice, please contact Ruth Chaney.
- Delaying billings
It may be possible for you to delay despatching goods or providing services until just after your year end. In that way the income will be carried over into the next accounting year. - Bringing forward costs
If you are planning to incur costs anyway, can you bring some of them forward into this current year. This also reduces your profits. - Provisions
Have you made specific provision for any bad or doubtful debts and also for obsolete stock? Provided that the provision is specific you can make a full provision and get the appropriate tax relief. Remember, you can also reclaim the VAT on bad debts. - Accruals
These are allowances in your accounts for costs that may have been incurred but for which you have not yet had the invoice. We need to make certain that any costs of this type are included such as salaries and bonuses, maintenance, advertising, stationery, credit card expenses, professional fees. The list is endless so please think about this one carefully. - Capital allowances
Capital allowances are the equivalent of a depreciation charge allowed by the tax man. Have you introduced any of your own assets into the business such as cars or furniture that you may not have told us about? If so we can increase your allowances. - Pensions
Pension contributions are still one of the easiest and safest ways to reduce your tax charge. Aim to make contributions in the years when you are a 40% tax payer for the maximum benefit. - Business use of your private facilities
Have we made full allowance for business use of your car, your home and your telephone? Are there any other costs that you incur privately on behalf of the business? Check your personal bank statement and you may be surprised - a subscription to a car breakdown service is one that often gets missed. - VAT
Are you recovering all of the VAT that you are entitled to? Some expenses may include VAT that you can get back even though you may not have a VAT receipt! Ask us about this one. - Dividends and salaries for Directors of Limited Companies
Always check with us that you are minimising your tax by using a combination of salary and dividends. If you are basic rate tax payer this year and you expect to become a higher rate tax payer next year, then pay yourself a bonus now and save 18% tax!
Contact us
This tip sheet is provided to you completely free of charge but if you would like further information please call us now to arrange a meeting. Print this voucher for a free initial meeting.
