End of Year Tax Tips: The Dos and Don’ts
It’s that time of year again. The financial year has just ended and now people across the country are setting about filling in their self-assessments or conducting their company’s end of year accounts.
Many will be searching the internet for tips and tricks that they can use to help minimise their tax bills and maximise their profits. Today, we are going to help you to do this by providing you with a number of different tips to help you save money. We’ll also mention a few things that you certainly shouldn’t be doing! Here are the dos and don’ts for end of year tax assessments.
Do Maximise Your Use of Products Against Which You Can Offset Profits
There are a number of products out there that are tax-free. This means that you put money into them and this money cannot be taxed.
A prime example of such a product is the Cash ISA. Each year we are all given an annual allowance that we can put in a Cash ISA without attracting tax. For example, this year (2017/2018) we’re all allowed to invest £20,000 tax-free.
How does this affect your PAYE or Self-Assessment? It means that you can put some of your earnings into the ISA and then declare tax relief on the amount you put in to the ISA. That means that you end up paying less tax overall.
If you have any questions about this, or you are thinking of telling your employees about the value of Cash ISAs, you should discuss this with PAYE services, who will be able to advise further.
Another product that you will find useful in the same respect is on pension savings. Again, we all have a certain tax-free allowance on the amount we put into our pensions. If you have paid into a pension this year, then you should definitely research how to claim tax relief on the amount you saved.
Do Claim Against Losses Made Last Year
If you’re operating a business (and this includes those of you who do self-assessment), and you have made a loss in previous years, you might be able to offset that loss against this year and bring down your tax bill. There are rules and regulations governing this, but for the vast majority of losses, as long as they occurred in the recent past, you should be able to offset good years against bad years.
Again, if this is something that you think you might be able to do, talk to a financial services professional (e.g. an accountant) who will be able to advise you further.
Don’t Fudge Invoice and PAYE dates
Some people realise that if they date an invoice after the 5th of April, that it will go into next year’s accounts, giving them a reduced bill this year. It can be very tempting to do this if you are issuing the invoice to a customer who you know is slow to pay — it means you owe tax on money you haven’t yet received, unless you’re doing cash accounting.
However, never fudge dates on invoices or PAYE payments. It’s illegal. It might seem innocuous, especially if you’re only changing the date by a couple of days, but if you get caught, you will get into a lot of trouble.
Instead, discuss your problems with a PAYE services or accountant. They will be able to tell you about ways you can manage the PAYE/Tax bills — for instance, HMRC may allow you more time to pay.