It’s a new tax year – what to do if you’re self-employed or a business owner
The tax year came to an end on April 5th 2022, which means now is the perfect time to look at your finances, so you can make the most of your money and start the next year in a good place.
So what steps should you be taking over the next few weeks?
Well, firstly, you should use this time to check that your accounts are up-to-date. Do your financial documents, from pension statements to company invoices, all tally with each other, so you can report accurately?
If you’ve kept your records organised over the last year, this should be fairly straightforward, but if you’re not completely on top of the detail, you should use the next few weeks to get your papers in order.
That’s why we’d recommend that, as a matter of course, you file any paperwork, such as bills, statements, expense receipts and invoices, as soon as it drops through your letterbox.
If you do that, you won’t have to waste precious time sorting through reams of paper and trying to make sense of it when time is against you, which can make the end of the tax year much more straightforward and less onerous.
Of course, your industry might have particular costs, benefits and tax reliefs that don’t exist in other sectors.
So if you want to get to grips with the details and make the most of tax allowances that you may be eligible for, it’s well worth speaking with an accountant with experience of working with people in your industry.
They’ll be ideally placed to highlight possible tax allowances you could benefit from, such as ways of reducing your Inheritance Tax liability, using an ISA Allowance and potential savings on Capital Gains Tax.
These are just some of the options that may be available to you, but these are hugely complex, so we’d certainly recommend consulting a professional financial adviser or accountant before taking any action.
Another important consideration as the end of the tax year looms is your longer term goals and ambitions.
For example, are you planning to sell off a property or business in the next few years, or perhaps take a lengthy sabbatical? If so, making the right financial decisions now could mean you pay less tax in the long run.
You could even plan ahead for circumstances a bit further down the line. For instance, you know you want to retire at some point, and you may even have a specific date in mind, so structure and manage your investments with that in mind, so you’re in the best position to make the most of your assets, rather than overpay in tax.
However, we’d stress that you shouldn’t be too rigid with your planning. Your circumstances, wishes and intentions may change, so make sure you take a fresh look at your financial plans every year or so, you can be sure your current strategy reflects what it is you want to achieve and helps you work towards that goal.
Finally, we’d urge you not to procrastinate. If you’re not on top of all the detail, tying up all the loose ends could feel overwhelming.
And of course, you can be fined if you don’t correctly file your information on time, so be proactive and take the pressure off yourself by acting sooner rather than later.
Remember, professional regulated financial advisors and accountants are there to help you, and can make this process much easier for you. If you’d like a recommendation for a professional in IFA or Accountant just let us know.
If this has got you thinking about moving, remortgaging, or your finances generally, we’d love to hear from you. Get in touch and we’ll be help you understand what’s possible, or sign up to our monthly newsletter, to keep your finger on the pulse.
Sam Murphy – 7th April 2022