Get ready for the end of the 2017/18 tax year

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Source: FreeAgent

The end of the tax year is rapidly approaching, which means it’s the perfect time to get everything in order and prepare your business for success in the next 12 months.

So, if you run a business that prepares its accounts to 5th April each year, here’s some top tips to help make preparing for the end of the tax year easier.

Speed up your spending – but be cautious!

Now is the time to be spending if you need extra day-to-day essentials, such as a new run of business cards, letterheads or envelopes. Even though items like these are intended to be used over a prolonged period of time, you are allowed to put the cost of them in the current tax year – so long as you purchase and start using them before the April deadline. So get ordering before 5th April 2018 in order to claim the tax relief a year earlier.

However, you’ll need to be careful. If any costs relate to a specific time after 6th April 2018, then you’ll have to carry them forward and claim tax relief on them at a later date.

For example, if you’re attending a course in October 2018, and you pay for that bill before 5th April 2018 – you’ll have to put the cost into the year ended 5th April 2019, because that’s the tax year in which the event will be taking place. It doesn’t matter that you actually paid for your ticket in the previous tax year.

Prepare for Making Tax Digital if you’re VAT registered

Making Tax Digital (MTD) reporting for VAT will become compulsory from 1st April 2019 for all businesses who are, and have to be, registered for VAT. This means that if you’re not already using a digital software to keep your books, 1st April 2018 would be the ideal time make the move!

This is because an accounting year end is the easiest time to switch to a new system, as you just need to carry over a few summary figures such as your accounting dates, how much your business owned and owed as at the end of the previous accounting year and your VAT registration number (if you’re VAT registered).

If you wait until April 2019 to switch you’ll be grappling with a new bookkeeping system and a new tax return filing method at the same time, so it makes sense to take the opportunity to get ready early.

Don’t try to defer your business income

It might seem tempting to try and move your business’s income into the next tax year, in order to pay the tax on this income a year later. But HMRC is wise to this trick! Income must be included in your accounts depending on when you did the work, not when you raised your invoices or when your customers paid you. So asking your customers to defer payment won’t work, nor will dating all your invoices as 6th April 2018 instead of 1st April 2018.

Do your books and speak to your accountant

It’s a great idea to make sure your business’s financial records are up to date and to also check in with your accountant, if you have one, before the end of the tax year. They may have other suggestions about how your business could be saving tax – but if you wait until after 5th April, you’ll have to wait until the next tax year to implement these.

For example, if you’re a higher-rate taxpayer you could claim tax relief by putting money in a pension, or by making donations to charity. So, if you talk to your accountant before 5th April, you’ll make it easier for them to help you.

By acting before the end of the tax year, you may find that you’re able to help your business save tax legally and ethically.

Read the original blog on FreeAgent.

Amy FowlerGet ready for the end of the 2017/18 tax year