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 2022 – 5th April 2023) 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 2022-23 tax year below.
For everyone who completes a tax return
Preparations for the tax year 2022-23 should start with your tax return for 2021-22!
- 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.
- If you are self-employed, be sure to get details of any COVID related grants you claimed in the year.
- Get that 2021-22 tax return completed early. Apart from the peace of mind that your return is done for the year, knowing what tax you need to pay in January 2023 will be great for planning purposes. If you are due to pay some tax in July 2022, this can also have an impact here.
Ltd Company Owners
- 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.Common ‘efficient’ levels of salary for many this year will be something between £758 and £1048 per month depending on your circumstances. This is because some announced changes become active from July that make this a little more variable that previous years. It does depend on your individual circumstances.
- Think about if you want to invest in new equipment, to make the use of the new ‘Super Deduction’ rules. These new rules allow you to get a 130%(!) deduction for any big items like new computers, equipment and vans. The practical effect of this is for every £1 you spend, you save 25p in tax.
- 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 the subject here.
- Consider whether voluntary VAT registration is a beneficial option for you. It is possible to register before the threshold of £85,000. This is often done if you are working directly for VAT registered businesses, but avoided if your clients are the general public! Watch our video on this subject here.
- Think about whether you want to contribute to a pension this year, and how much you will pay into that pension. Using company ‘employer contributions’ only will often result in a better overall tax saving. Speak to a professional on this to be sure.
- 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 quick, free tool here to do this.
- As a reminder, ‘dividend tax’ rates increase this year by 1.25%.
- Track your profits and review your numbers regularly. As as the year goes on, the numbers may show if you would be better off as a limited company. If your profits are reaching around £35,000 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.
- Also 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 the subject here.
- 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, and try 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 this subject here.
- 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 quick, free tool here to do this.
- As a reminder, due to the addition of the Health and Social Care levy, National Insurance contributions have risen by 1.25% this tax year.
- 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.
In case it’s slipped your memory, the new Health and Social Care Levy, raised the Employers National Insurance contributions you must make on behalf of your employees by 1.25%.
And a general reminder….
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!
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.