As the new tax year approaches, have you taken advantage of all that’s on offer to your business? If you haven’t used your Employment Allowance or claimed Growth Vouchers, now is the time to look into it. We offer some tips on the key things to do before 5 April.
Claim your Employment Allowance
Each business is allowed to reduce their National Insurance Contributions (NICs) by up to £2000 a year. You’re likely to be eligible if you pay Class 1 NIC on employees’ or directors’ earnings. Businesses, charities and amateur sports clubs can all claim.
To make take advantage of the reduction, you simply need to claim through your payroll software. Simply choose “Yes” in the ‘Employment Allowance indicator’ field next time you send an EPS to HMRC as part of your RTI submission.
If you don’t claim by the end of the tax year, you can ask HMRC to use any unclaimed allowance to pay any tax, National Insurance or VAT you owe or give you a refund after the end of the tax year if you don’t owe anything.
Evaluate ways to reduce your tax bill
Now is the time to look at reducing your personal and business tax bills. By channeling your income into a pension, bringing a spouse or partner into the business or looking at when you take dividends can all affect the amount you pay.
Here’s some things to consider:
Process all expenses
Expenses are a cost to your business and lower your profits, which in turn reduces your tax bill. So it’s worth ensuring all your expenses have been processed before the end of the tax year.
Don’t forget to include things like mileage allowance, mobile phone charges and business entertainment - these are frequently overlooked.
Look at the best time to pay dividends
If you take dividends in a lump sum, work out when is the best time to take these to minimise your personal tax bill.
Make investments
Did you know that by investing in companies not listed on the stock exchange, you could get tax relief through the Enterprise Investment Scheme (EIS)? Another scheme, The Seed Enterprise Investment Scheme (SEIS), encourages investment in businesses at seed-stage by also offering tax relief.
Find out more about EIS and the SEIS.
Claim Growth Vouchers
The Government’s Growth Voucher scheme offers companies help with professional advice. The scheme covers 50% of the cost of any support, up to a maximum of £2000.
The closing date for applications is 31 March, so get in quick if you’re interested. You can find out more here.
Reclaim any business rates
In last year’s Autumn Statement, the chancellor made changes which limit the amount of savings that can be received following a successful Business Rates appeal. After 31 March this year, appeals will only qualify for two years worth of savings instead of the previous seven years.
If you want to appeal about your business rates, you’ll need to move quickly. Visit the Government website to find out how to appeal.
Other actions for early in the new tax year
Plan major purchases
The Annual Investment Allowance (AIA) allows businesses to deduct the full value of any qualifying item from your profits before tax. These items are plants and machinery - full details of what can be claimed on are listed on the Government site.
In the 2014 Budget, the Annual Investment Allowance doubled to £500,000 until the end of 2015. There’s uncertainty about what happens after that, as the chancellor said in this year’s Budget that “a better time to address this is in the Autumn Statement.”
For that reason, many businesses are hoping to make major purchases early in the tax year, to ensure they can claim under AIA.
Using the broadband voucher scheme
The Connection Voucher scheme, which was due to end in March this year, has now been extended for another year. This gives you more time to apply for a grant of up to £3,000 to upgrade to super-fast broadband. If you’re a small business based in one of the chosen UK cities, you may be eligible.