Year end tax advice (part 1)

Year end tax planning for businesses, freelancers and self-employed web designers

In association with our friends at London Tax Accountants Coman & Co. we’re offering some handy posts to help with financial queries and crucial advice useful to those who need it. This week we’re starting with year end tax planning…

Planning before the end of your accounting year could save tax and improve cash flow.  With 5 April approaching and many web designers reaching the end of their year on 31 March, we have put together these ten tips for year end tax planning and offer the initial five now with the second part arriving next week:

1. Bring forward costs and get tax relief a year earlier. Be careful though, as some expenses have to be spread over tax years, even if you paid for them now.  Also keep in mind that tax rates are increasing next tax year, especially for higher income groups.

2. Make your investment in the business before the year end and enjoy the reduction in your tax liability a year sooner. Business are still entitled to 100% tax relief on most capital expenditure up to £50,000 per year.

3.Delay invoices. If possible, plan larger jobs until after the year end and you will delay payment of tax thereon for a further year.  Be careful though as you must account for tax on fees built up through work in progress.

4.Value stock. Now is the time to do a stock take to assess write offs.  Stock is valued at the lower of its cost and its net realisable value.

5.Consider changing your year end. If your profits have been going down recently, then you could benefit from extending your year end towards 31 March.  If profits improve over the next twelve months then you will delay tax on these profits.  Moreover, any profits you made when you started the business could be offset to further reduce your tax bill.

Come back next week when we’ll reveal the final five tips…

Coman & Co. are London Tax Accountants able to help your web design business to succeed through quality accounting and tax advice.