2022/2023 has been one of the most unusual tax years of current times. On the back of a global pandemic, 2022 saw a considerable rise in inflation caused by worldwide supply chain issues after Covid, the ever-rising price of energy and the war between Russia and Ukraine.
As the country is expected to make its way into a recession this year, it’s essential that businesses across the UK make the most of government allowances and arrange their accounts as tax-efficiently and accurately as possible before the accounting year comes to an end.
The current tax year will end on Wednesday 5th of April. Most of those who are sole traders should look to begin preparing their self-assessment tax forms at the beginning of March.
We’ve put together some tips on how you can prepare for the tax year's end.
1/ Make the big purchases now!
If you’re looking to make any expensive purchases as a sole trader, do it now and you’ll see the tax relief much faster!
When planning to purchase potentially costly new equipment, it makes sense to get a hold of these before the end of the accounting year.
By doing so, you’ll receive tax relief one year earlier than if you waited until after the 5th of April!
2/ Make the most of your allowable expenses…
Sole traders need to make the most of the help that is provided for them by the government.
Claiming for all eligible expenses will allow businesses to reduce their tax liability.
There is a long list of expenses you are able to claim for, from uniforms and stationery to equipment, machinery and business vehicles!
So have a look through your receipts and see what tax relief you can receive before the tax year ends.
3/ Don’t forget to check that your invoices have been paid…
Business owners should already know it’s good practice to keep an eye on your incomings and outgoings throughout the year.
To avoid any confusion when preparing for the end of the tax year, it’s essential that all of your client’s invoices are paid by the 31st of March at the latest.
You need to make sure that clear guidelines have been set before purchases and send out those invoices as early as possible to ensure you receive your payments on time!
4/ Make the most of your business ISA…
If you’re planning to make any future investments, it may be a good idea to consider topping it up before the end of the tax year, as long as you stick with the annual limits.
ISAs do not attract tax relief on contributions, but they do offer tax-efficient growth and tax-free withdrawals.
The current ISA allowance is set for £20,000 for the 2022/23 tax year, this will be lost if not used by the 5th of April, so make the most of it whilst you can!
5/ Review the structure of your business
As a business owner, you should review whether the current structure of your business is tax-efficient.
If you’re a sole trader, you may be able to save on taxes by incorporating your business (registering as a limited company), in turn reducing the amount of income tax that you would pay.
6/ Hire a great accountant to guide you through the process…
Here at One Two One Accounts, we have helped many businesses successfully prepare for the end of a tax year.
For help with your self-assessment tax returns, or further advice on how to get ready for the 5th of April, get in touch with us today.