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Effective tax planning is essential if you are to minimise your tax bills. Simple tax planning can significantly reduce your tax liabilities.
The self-assessment tax return is an unavoidable burden if you are liable for self-employed tax or have complicated income tax affairs.
Corporation tax is charged on a company's profits. If you trade as a limited company, ensure that paying this tax is as painless as possible.
National Insurance Contributions (NICs) are payable whether you are self-employed or employed by your own company, although different rates apply.
As well as your legal obligations, you’ll want to ensure that payroll is painless and that you use any opportunities to improve your tax-efficiency.
Effective VAT planning aims to ensure that VAT is relatively painless, and that you are reclaiming as much as possible of the VAT you pay.
Capital gains are made when you sell something for more money than you paid for it. As a result, you can be subject to tax. Take professional advice.
Business property taxes apply to businesses with commercial premises.There are two commercial property taxes: business rates and stamp duty land tax.
If you have tax problems or face a tax investigation, it pays to seek professional advice and you must act rather than just hoping for the best.
As well as being a legal requirement, maintaining accurate accounting records ('books') are essential when completing your corporation tax return. They can also make life easier for your accountant – which should help minimise how much they charge you.
In broad terms, you need to keep book-keeping and accounting records that enable your accountant to work out your taxable profits, calculate any corporation tax due (if your business is a company) and file your corporation tax return.
Your book-keeping and accounting records must also include details of all receipts and expenses (and what they relate to) and all sales and purchases of goods. You’ll also need records of your assets (eg plant and machinery) and liabilities (eg business borrowings). If you sell goods, you will at least need records of stock at each financial year-end.
As well as adequate book-keeping and accounting records, you need a sound record-keeping system. It’s worth asking your accountants for advice, because this will help ensure that any book-keeping and accounting software you use will be compatible with their systems.
Typical book-keeping and accounting records will include copies of invoices (or till rolls), order records and delivery notes, a petty cash book and bank records. You can use accounting software to handle routine book-keeping — such as updating sales and purchase ledgers — and produce useful management information. Your accountant can use the data to prepare year-end financial statements and deal with corporation tax.
You must keep your book-keeping and accounting records for at least six years from the end of the corporation tax accounting period they relate to. Typically, this will be the same as your own financial year. So, for example, if you prepare accounts covering the calendar year, your book-keeping and accounting records relating to 2013 would be kept at least until the end of 2019.
You will need to keep book-keeping and accounting records longer if they also relate to later accounting periods. For example, you need to keep records of equipment purchases until at least six years after you dispose of the equipment, so that you will be able to work out any chargeable gains to include in the corporation tax return.
If HM Revenue & Customs (HMRC) tells you it has started an enquiry into your corporation taxes, you must keep your book-keeping and accounting records at least until the enquiry is over. And if you file your corporation tax return late, you must keep your book-keeping and accounting records at least until the deadline for HMRC to start an enquiry has passed.
In most cases, you can keep book-keeping and accounting records in electronic form, but you must keep paper originals for any dividend vouchers and bank interest certificates.
As far as possible, keep personal and business records completely separate. Avoid taking money for personal use out of your company’s bank account (that includes using company debit and credit cards to pay for personal items).
Where mixing business and personal expenditure in unavoidable, for example, if you use your own car for business purposes, keep evidence to show what expenditure is personal and what is business (eg by recording business mileage). Otherwise, mixed business and personal expenses are not allowable against corporation tax.
If your company has international dealings with related businesses, such as a subsidiary or another business in which you have an interest, you will need to keep additional records. You need to be able to demonstrate that transactions are carried out on an ‘arms-length’ basis, or to calculate how the differences affected your profits.