Your tax year end checklist - what do you need to do?
Posted by siteadmin on Tuesday 2nd of March 2021.
Your tax year end checklist – what do you need to do?
As we approach the end of the financial year on 05th April 2021, you may be thinking about what you need to do before the new financial year begins, and how you can ensure your business is in the best position possible.
For business owners, there’s lots to think about over the next couple of months and there’s a lot to be done. This may include updating payroll information, expenses or submitting your annual accounts.
With so much to think about and plan for, it may seem overwhelming. To make things easier for you, we’ve created two checklists:
- The things you must do before the end of the financial year.
- The things you may want to consider before we enter the new financial year.
So, what do you need to do before 05th April?:
1. Submit your annual accounts
Businesses are required to submit their annual accounts to HMRC before the end of the financial year. This will include an income statement, a profit and loss statement, a statement of financial position (including all assets, capital and reserves) and footnotes, which should include all details of transactions between directors and the company, such as loans or guarantees.
2. Confirm your company details with Companies House
As a director of a Limited Company, you are obligated to confirm your company’s information with Companies House each year. Although there is no set deadline for this, the information must be submitted no later than a year and two weeks after your previous entry. Many business owners choose to confirm their details at the same time as submitting annual accounts, to streamline financial reporting.
3. Update payroll records
Your HMRC payroll must be completed or submitted before the end of the financial year. This includes ensuring all payroll records are up to date and beginning to compile P60s for your team members, which must be sent by 31st May. The end of the financial year may also be a good time to review your existing payroll software and consider an upgrade where necessary.
4. Check for unclaimed expenses
Be sure to check for any unclaimed expenses. Review any purchases you’ve made on behalf of the company and ensure they have all been claimed, to make sure you’re in receipt of the right tax allowances.
What else should you think about before year-end?
1. Make use of ISA and pension annual allowances
ISAs and pensions are a great way to secure a fruitful financial future, as any income and capital gains made on these investments are free from income tax and capital gains tax.
Before the end of the financial year, consider whether you’ve made full use of the allowances available to you from an ISA or pension, as these can’t be carried over to the next financial year.
Visit our investment calculator to see how well your investments may be performing.
2. Put your dividend income investments in an ISA
Dividend income from investments outside of an ISA or pension may be subject to tax. For any dividend income higher than £2,000 or outside of your Personal Allowance (the amount of income you can earn each year that isn’t subject to taxation), the amount will be taxed at 7.5% for a basic-rate taxpayer, 32.5% for a higher-rate taxpayer or 38.1% for additional-rate taxpayers.
As such, to make the most of the tax allowances available to you in an ISA, consider contributing some of your dividend income into an ISA.
5. Plan for the next financial year
Think about where you want your business to be in a years’ time. Do you want to simply survive, or do you want to thrive? Once you’ve completed the difficult necessities, start to plan for the next financial year:
- Look into VAT – are you and your company VAT registered? VAT returns are a great way of reducing a business’ annual expenses.
- Have you considered R&D Tax Credits? It may be worth speaking to a specialist to see if you’re eligible.
- Review your suppliers – is there a more affordable option available?
- Pensions – how favourable is your pension scheme for yourself and your team? Is it worth thinking about another option? Consider speaking to other pension providers to see if you can provide a better pension plan to your team. Visit our pension shortfall calculator to see how well your current pension plan will support you when you come to retire.
- Employee benefits – could you be offering a new incentive to your team? Or upgrading an existing benefit?
- Look back over the entire year – where could you cut down on costs? Where could you be spending more for a greater profit?
For more information and advice on what you need to do and what you could be thinking about before the end of the financial year, get in touch or call 0121 285 8528.
Disclaimer: The value of your investments can go down as well as up, so you could get back less than you invested.