Time’s running out for planning!

May 8, 2013

Croombs Chartered Accountants in Hampshire

This month I will be concentrating on a couple of issues for business owners to be aware of before the end of the tax year.  Firstly I will be looking at some simple tax planning points and then explaining an important change which will affect all employers in the country.

Here are some simple things you can do to make sure that your tax bill is minimised:

  • Consider making a payment into your pension.  You must speak to financial adviser before you do this to make sure it is appropriate for you, but from a pure tax planning perspective pension contributions are one of the best ways to reduce your tax liability.  Of course you will be locking this money away until retirement so you will need to weigh up the pro’s and con’s of this.
  • If your company has sufficient reserves, make sure you maximise the amount of salary and dividends you take to avoid paying higher rate tax.
  • If you have loaned your company money in the past it is worth considering whether to withdraw it now to avoid paying higher rate tax on further personal withdrawals from the company.
  • Make sure any expenses you have paid for personally have been reclaimed from the company, or if you don’t want to be reimbursed at least make sure there is a record of the expenditure so that your Accountant can claim tax relief on these payments.

Following the end of the tax year HM Revenue & Customs are introducing what they are calling RTI (Real Time Information). This will affect all employers in the country.  The basic premise behind this is to make sure employers report the payments they have made to their employees on a monthly basis, and more importantly the PAYE and National Insurance deductions which have been made. This will help HMRC understand how much tax is due from each business each month. Currently this information is reported annually.

Employers will then be chased up for payment each month which will help HMRC receive their money faster!

Employers need to check the information they hold about their staff within their existing payroll system is accurate as this is fundamental to the process.  If the information is incorrect RTI will not work and therefore Employers could be in breach of regulations, potentially leading to penalties.

I would recommend acting now to check your payroll system is compliant and all data within it is correct.  If you need help with your company’s payroll or would like to pass all the work onto someone else we will be happy to help you.

To find out about how we help our clients pay the right amount of tax please give us a call.  All initial meetings with us are free of charge and with no obligation to you.

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