Having just finished off all our 2022 personal Tax Returns, we now need to plan for 2023! The 2022/23 personal tax year ends on 5th April 2023 but many of our company clients have a 31st March year-end, causing us a bit of a headache to get all the planning done in time.
With that said, here are some considerations for individuals:
- Have I claimed a deduction for all available expenses?
- Have I claimed all the tax reliefs to which I am entitled?
- Have I made best use of all the available tax allowances?
- Do I have losses and how best should I utilise them?
- Should I consider changing my accounting date?
- Should I bring family members into the business?
- Should I make a pension contribution?
- Should I dispose of that asset to make a Capital Gain in this tax year or next?
- The Capital Gains Tax allowance reduces after 5th April 2023, from £12300 to £6000 (and then to £3000 from April 2024)
- Am I looking to borrow money, and do I need to maximise profits or minimise them to reduce tax?
Note that pension contributions must be made, with the cash having left your bank account, to get the tax relief in 2022/23. Any assets must have been bought, or at least in a contract you cannot get out of, before 31st March 2023 or 5th April 2023.
For company clients, many of the above apply, plus the following:
- The tax rates change to 25% from 1st April – what is the impact for us?
- If we have associated companies, do we need them?
- Do we buy an asset before the year-end or after? Have we considered whether we need that bit of kit, and do we sell it before the year-end or after? Super deductions finish on 31st March – does this affect us?
- Who looks at our accounts? Do we need to show profit and a healthy balance sheet, or have we got too much profit and need to mitigate the tax bill?
For a company client, do you know whether profits are going to be below £50,000 and therefore taxed at 19%? Can you achieve that by making a pension contribution or buying an asset? Do you know that profits in a company of over £250,000 are taxed at 25%, and that this means there is a marginal rate of tax of 26.5% on profits between £50,000 and £250,000? Do you know what the hell a marginal rate of tax is?
Whatever the motivations, if your accountant hasn’t contacted you yet, call them to check what needs to be done before the year-end… and possibly after 15th March too when the new budget is brought out and we may have to plan all over again!
To discuss any of these issues, please email me on firstname.lastname@example.org or call on 0114 272 0306 or 01302