Happy New Tax Year! (2023/24)

Kirsty Young Business Tips, Limited Company, Personal Tax, Tax

Whilst this is a great (?!) accounting joke we do every year, it is also a fairly exciting point in the year for us tax geeks.

The start of the new personal tax year (April 6th 2023 – 5th April 2024) is a time when important allowances are reset, and new tax planning opportunities arise!

To get you off to the most efficient start, we’ve listed some points to consider for the new 2023-24 tax year below.

 

For everyone who completes a tax return

Preparations for the tax year 2023-24 should start with your tax return for 2022-23!

Don’t put it off until the autumn (or January!), now is the time to start gathering your paperwork for your tax return.

Check out our previous blog on the subject for a reminder of the sort of information you might need, including:

  • Forms P11D, P60 and P45
  • Interest from bank accounts
  • Student Loan information
  • Income from any side hustles or property rentals

 

Why should I do my tax return early?

Getting your 22-23 tax return done early will help in knowing what tax you need to pay by 31st January 2024. This info will be great for planning purposes!

You’ll also enjoy the peace of mind of knowing that your return is done for the year. (And yes, you can be a little smug too!)

If you know you are due to pay some tax in July 2023, known as a ‘payment on account’ submitting an early return can often have a positive impact. This is because the HMRC can change the amount required on account based on real figures from the previous year rather than a “best guess” extrapolation.

 

Ltd Company Owners

Some tips and reminders for you now we are in a new tax year:

Review your director’s salary

Whilst the tax allowances and ‘bands’ are staying pretty much the same this year, you still need to review your salary level to make sure it’s as tax efficient as it could be.

A common ‘efficient’ levels of salary this year will be something between £758 and £1048 per month, depending on your circumstances.

The ‘tax free’ Dividend Allowance has dropped

A sad reminder that the ‘tax free’ Dividend Allowance has dropped from £2000 per year to just £1000. Bear in mind that next tax year it drops even further, to a measly £500 from 6 April 2024.

Corporation Tax has increased

Your rate of corporation tax has now increased from 19%, to up to 25%, depending on your profits.

The VAT threshold remains the same

If you are not VAT registered, ensure you are monitoring your turnover (sales) throughout the year to check if you are close to the VAT threshold of £85,000. You want to be ahead of the game, and not get caught out by having to register late. Watch our video on late VAT registration here.

Consider voluntary VAT registration

Research and decide whether voluntary VAT registration is a beneficial option for you. It is possible to register before the threshold of £85,000. Voluntary registration for VAT can often be beneficial if you are working directly for VAT registered businesses, but commonly avoided if your clients are the general public! Watch our video on voluntary VAT registration here.

Plan your pension contributions

Think about whether you want to contribute to a pension this year, and how much you will pay into that pension. Using only company ‘employer contributions’ can often result in a better overall tax saving. Speak to a professional on this to be sure.

Plan your cash flow

Plan your cash for the year. Take time to plan out your ‘ins and outs’ over the year. This is especially important if you are thinking of recruiting or growing in general. You can get a simple, free cash flow tool here to help do this.

 

Sole Traders

Some new tax year tips and reminders for sole traders.

Time to go Ltd?

Track your profits and review your numbers regularly. As the year goes on, the numbers may show if you would be better off as a limited company. As a ballpark number, if your profits are reaching around £45,000 a year, this is a great time for this discussion.

If you don’t have a system to monitor this, consider setting up a cloud software solution such as QuickBooks or Xero.

Monitor your sales

Monitor your turnover (sales) throughout the year to check if you are getting close to the VAT threshold of £85,000. Better to know it’s coming than to register late. Watch our video on VAT registration here.

Voluntarily registering for VAT

Keep an eye on whether voluntarily registering for VAT is a good business option for you. You can register before the current VAT threshold of £85,000. Take a good look at this option if you are working directly for businesses registered for VAT. It’s common to resist the temptation to register early if the vast majority of your clients are non-VAT registered, i.e. the public! Watch our video on voluntary VAT registration here.

Plan your budget

Do a cash budget for the tax year ahead. Plan your ‘ins and outs’, especially important if you may need to recruit, or your business is growing. You can get a simple, free cash flow tool here to help do this.

 

Employers

Claim Employers Allowance

If you are eligible for Employers Allowance, you must re-send an ‘EPS’ (Employer Payment Summary) with the boxed ticked for Employers Allowance.

You need to do this once every new tax year to continue to claim the allowance. It was increased this year to up to £5,000 for your business.

 

And a few general reminders…

Did you sell a property?

If you sell a property at a gain, you may need to do a special tax return within 60 days of completion – remember to do this!

Capital Gains Exemption

Another sad news reminder; the annual amount that is exempt from Capital Gains has dropped by over half from £12,300 to £6000…

Higher rate personal tax threshold has dropped

If you are lucky enough to earn more than £125,140 you now start paying the higher 45% personal tax rate at this level, (down from £150,000).

 

New tax year help from Heelan Associates

If you need any help with these points, be sure to get in touch with our team – we’d love a chat. Equally, if you don’t have an accountant, or feel you aren’t making the most of tax year allowances with your current accountant, we can help.