Tax Year End Planning for SME’s and Small Business

With the tax year end approaching at the end of March, now is the time to review your businesses and your own tax situation to see if any actions need to be taken before it’s too late, to maximise your tax efficiency. Below are some suggested action points:

Personal Tax

• Check to see whether you and your family have utilised the various annual tax allowances, such as the savings and dividend nil rate bands, capital gains tax and ISA annual allowances.
• Can additional pension contributions or gift aided donations be made? These can be extremely tax efficient for people whose personal allowance has been abated due to high income.
• Is an adjustment of income needed to mitigate the high-income child benefit charge.
• If there is a family trust, now is the time to see whether an income distribution can be made to beneficiaries with low or no income to generate a tax refund of the tax credit.
• Do you need to transfer income producing assets into your spouse’s name so that future income is taxed on them and potentially at a lower tax rate.

Business Tax

• If your businesses year end is 31 March, then you may wish to advance expenditure and defer income to temporarily reduce tax payments and take advantage of capital allowances/full expensing reliefs.
• The Autumn Statement announced the reform of the R&D schemes from 1 April 2024 so businesses that utilise this valuable relief need to understand whether they want to accelerate expenses pre or post this date to gain most tax benefit.
• The use of accrued salary or bonuses is another option to consider when looking to reduce a company’s tax liability.
• For the self-employed and partnerships that don’t have a 31 March/5 April accounting year end they will need to decide whether they want to change to a 31 March year end following the introduction of the ‘Basis Period Reform’ measures by HMRC from 1 April 2024.

A conversation with your accountant now regarding the above points can hopefully provide you and your business with a tax advantage.

Author: Stuart Chipperfield