Pre-year-end Tax Planning

Reviewing your taxes before the end of the UK tax year can significantly reduce the amount of income tax you have to pay. At Spotlight Accounting, our pre-year-end tax planning service is designed to help you minimise the amount of tax you and your business have to pay long before the tax return deadline.

At a minimum level, most clients work with us using our annual accounts and corporation tax service. This ensures that you and your business remain compliant with HMRC. Part of this service involves calculating corporation tax and income tax liability.

Working with us, 3 months before the year-end can estimate your tax liability and look at ways to reduce costs.

Spotlight Accounting, a 9-month tax planning review service

Although paying tax is never enjoyable, it is, unfortunately, unavoidable. However, our team of tax experts can help you implement strategies to minimise the amount paid.

There is nothing worse than an accountant telling you about tax reliefs and tax benefits that you could have taken advantage of at year-end when it is too late. The team at Spotlight don’t like it, nor do our clients. This is why we offer a pre-year-end tax planning service well in advance of the financial year-end.

Spotlight Accounting is here to help you get a better understanding of your business’s financial performance by analysing your profitability and income during the 9-month period of your financial year. We can then give you a good idea of what your tax liabilities might be. Additionally, we can provide personalised recommendations based on your individual and business circumstances.

If you are looking to make the most efficient tax savings at the end of your tax year, then get in touch to find out how we can help!

What is pre-year-end tax planning?

Pre-year-end tax planning is a beneficial method used to assess your business’s profits and potential tax liabilities long before the end of the current tax year.

It gives you time to put into place an effective strategy which can be implemented before the tax year concludes, helping your business to save tax and gain a more precise overview of your financial position.

Why would you tax plan before year-end?

Tax planning is a smart way to prevent your business from being caught off guard when it comes to paying tax at year-end. It ensures that you and your business are taking advantage of any income tax relief and allowances available to help you avoid any unwanted surprises and, ultimately, be better prepared.

For example, a business investment in equipment of £50,000 timed correctly could save £3,000 in tax.

It can also come in handy for directors who want to make pension contributions. In order to make an informed decision about what pension contributions can be made, it is a good idea to have knowledge of the business profits, dividends drawn to date and the available annual allowance. Without this information, waiting until after the end of the tax year could ultimately result in an additional £15,000 in tax.

Our pre-year-end tax planning service

Our 9-month year-end tax review service ultimately saves tax and recommends ways that both you and your business can be more tax efficient. This is the first stage in tax planning for you and your business.

As part of our planning process, we examine the income generated from your business and additional income, such as rented property or capital gains, during the tax year. We then explore any available allowances and tax reliefs, including dividend allowance and personal allowance.

By comparing these to the current tax rates, we can make sure that the tax liabilities for both you and the business are as tax efficient as possible.

Capital Gains Tax planning

Capital gains tax exemption is the tax-free allowance you’re entitled to in the financial year when selling or gifting an asset. Working with one of our tax experts, we can help you navigate the complexities around capital allowances and ensure you utilise all available benefits.

We look at:

• Strategic timing for the most efficient tax savings

• Ensuring you stay compliant with tax laws

Utilising tax relief

Spotlight Accounting is committed to providing excellent tax planning support that helps your business take full advantage of all available tax reliefs and tax breaks.

Common tax reliefs include the personal allowance, which is the tax-free income that can be earned in the tax year, as well as tax deductions for other expenses such as making charitable donations and contributing to your personal pension.

We’ll explore all the tax reliefs available to your business, saving you more money at the end of the tax year.

Optimising the director’s income

The most common form of year-end tax planning is making sure that a director’s taxable income stays within the basic rate tax band. We have had scenarios where rental income or new taxable benefits have taken the taxable income for the year above the basic rate band, and the client has been paying income tax at a higher rate.

Our goal is to structure your income in a way that minimises tax liabilities while staying compliant with tax laws and regulations.

We look at:

• Salary and dividends

• Pension contributions

• Personal allowances

• Business expenses

One key issue recently has been overdrawn directors’ loan accounts. We’ll help you establish the balance early to prevent unnecessary tax payments.

What does this mean for your business?

For your business, we will look at the profit to date, existing investment in plant and machinery and planned investments. We’ll calculate the most tax-efficient way for timing the purchase and claiming capital allowances so that they are claimed against the highest tax rate to maximise the tax relief available.

We will also check that you have taken advantage of certain tax-free benefits and allowances before the year-end tax period closes.

We firmly believe it is important to understand the needs of our client’s business and ensure we are tailoring our planning approach to their business goals. This results in a more efficient tax planning exercise and ensures your company moves in the right direction.

Our service also looks at your business’s profit and tax liabilities and advises of any tax breaks the business can take advantage of before the end of the financial year.

Plan ahead with Spotlight Accounting

Spotlight’s pre-year-end tax planning is the first stage of your year-end tax planning journey. It takes a snapshot at month 9, enabling us to calculate your potential tax liability so it doesn’t catch you off guard come year-end.

Ultimately, our pre-year-end tax planning service is designed for businesses and their owners rather than individuals. However, we do sometimes work with clients on a one-off basis. For example, we can work to mitigate capital gains tax and inheritance tax liabilities where landlords are looking to pass portfolios onto the next generation.

Our team of experienced professionals works closely with each client to ensure that their unique business needs are met and that they are able to minimise their tax liability.

Our business tax review service takes tax planning to the next level. Contact us today to get ahead of the tax year.