Reduce your tax by being organised
It’s that time of year again. “Already” I hear you say! Yes indeed, the tax year-end has now passed and for most doctors and dentists that also means the end of the accounting period and the year-end for corporation tax too. Are you one of the proactive few when it comes to getting your taxes finalised? Or are you more of an “ostrich” burying your head in the sand until there is no other choice but to get organised? One key benefit of filing your tax return early is that you can reduce your tax in this current tax year. Interested?
Tax return filing dates – a reminder
Personal tax returns for the year ended 5 April 2015 are due for filing by 31 January 2016. Sounds a long way off doesn’t it? And, it is – a whole 10 months…less a few days.
Corporation tax returns for the year ended 31 March 2015 are due for filing by 31 March 2016, so, even longer – although, don’t forget the formal financial accounts need to filed with Companies House by 31 December 2015, along with the payment the next day.
However, we all know how quickly time flies so don’t let these gaps mislead you into procrastination.
3 key benefits to early tax return filing
Benefit 1 – Knowing your tax bill in advance (to save funds accordingly)
Knowing your tax bill in advance means that you will not be scratching around for spare cash when the deadline for payment arrives on 31 January 2016 for self-assessment tax and 1 January 2016 for corporation tax (*).
Forward planning will give you extra months to be able to top up any existing tax savings to ensure you are able, wherever possible, to make the payment to HMRC in full.
Benefit 2 – Amending your July payment on account (POA) (so you can keep your money where it belongs)
Your self-assessment POA will be due on 31 July 2015. As you are probably aware, this is based on the performance of last year, which could be better or worse than the current financial year.
Having an accurate calculation of your personal tax liability before this date means this can be amended if the calculation was overstated.
This means you can keep your money in the bank or your ISA instead of paying it over to the taxman in advance.
Benefit 3 – Maximising tax saving opportunities for next year (which is now this year!)
There are plenty of ways to legitimately keep your tax bill low, year on year.
However, the most effective tax planning
requires time to plan and implement the strategy to maximise the benefit within the relevant tax year.
For example, pension planning – carrying out this at the start of the tax year highly benefits as pension contributions can be evenly spread rather than a “catch up” payment that may be unaffordable.
Read more: Testimonials from our clients
Preparing the previous year’s tax return shortly after the year-end means the full and current picture can be analysed, lessons can be learned and changes to the tax planning strategy implemented for this tax year.
This goes for everything tax related, business and personal, including, naming a few things:
Without your accountant carrying out the in-depth work required to finalise your business and personal tax position, it is difficult to provide full and accurate advice.
Take a step back to take two steps forward!
- Dividend planning
- Fully utilising tax allowances
- Introducing any new tax saving schemes
- Planning business expansion and investment
- Financial planning, such as ISA’s and pensions
Get your tax position for last year finalised and enable accurate tax planning for the current year to commence at the earliest opportunity.
Figurit work through the year with our clients to ensure tax planning opporutnities are discussed. We want to help you to minimise your tax so help us to help you by working together with us in the coming months.
020 7376 9333
(*) Based on 31 March 2015 year-end
– How much should you be saving for your tax?
– TAX: Summary of tax rates for 2015-2016
– 3 things you need to know from the 2015 Budget