The end of the current tax year is approaching, and so too is the perfect time for smart business owners to start planning for hassle-free self assessment in 2018-2019. April 6 is the important date to ring in red in your diary – the first day of the new tax year, and the start of your new enlightened tax regime.
You may have the basics of your self-assessment return under control, and can back up your knowledge of the HMRC submission deadlines with the use of one of many personal income tax calculation tools now available online.
But is it really a substitute for an early bird planning session with your expert accountant, who can be your personal guide to a stress-free tax year by detailing in advance how much tax you will have to pay, and allow you to set the necessary funds aside?
Tax changes affecting your self assessment
Are you up to speed on government tax policy? The Chancellor can make changes to National Insurance rates for the self employed, alter personal allowances, and introduce other complex measures in his fiscal overview. Without expert guidance you can easily get blown off course when tackling your self assessment.
HMRC do provide a lot of information on their website, but it can be quite daunting, confusing and time-consuming to get your head around all of it. They also have a self-employed ready reckoner to help you budget for your future tax bill, based on your weekly or monthly profit forecast.
It’s useful but simplistic, and not designed to understand the idiosyncrasies of your personal tax affairs like your accountant can. It doesn’t include other taxable income in its calculations, takes a one-size-fits-all approach to applying personal allowances, and doesn’t include possible ‘payments on account’.
You’ll no doubt be aware that any income tax due to HMRC has to be paid by January 31 following the end of the tax year in question. But HMRC may also want you to make what are known as payments on account in July and January for the following year’s expected profits.
The HMRC ready reckoner isn’t going to help you with that, nor are online self assessment tax calculators. This is where your accountant comes in – and the value of getting ahead of the game with some early-bird planning.
If you’re running a growing business in Essex, Hertfordshire or London, you want as much certainty as possible when it comes to planning your budgets, predicting your cash flow and working out how much you have to invest in assets such as vehicles, equipment or business premises.
Making the most of the time in hand early in the new tax year allows smart businesses to get a handle on how much tax they’ll owe. They say knowledge is power; this kind of early bird planning will certainly give a power boost to your financial decision making over the coming months.
Advanced self assessment calculations are best left with the experts
If you have to do a self assessment return, it’s based on your profits if you’re self employed, with a variety of other income streams taken in to account.
There are some more advanced self assessment income tax calculation tools out there that allow you to change a few variables: like entering your own tax code; excluding Class 2 National Insurance contributions; and adding information on student loan repayments and a few other allowances.
But they’re still falling well short of a face-to-face discussion with your accountant, who can do all of the above but also take into consideration whether you owe previous unpaid tax, have overpaid income tax in a previous year, and much more besides.
There’s also the fundamental question of whether your record keeping is up to scratch to give you an accurate financial picture to work with in the first place. That’s the kind of question the AAT qualified bookkeepers and associate accountants at Oscar Fairchild can answer and help you keep on top of.
There is a lot to get your head around when it comes to looking at self assessment. Putting it off or letting your worries build up because you find it confusing is the worst thing to do.
So make sure your future is protected through astute personal tax planning – and book that date in the diary now!
About Oscar Fairchild:
Oscar Fairchild (incorporating Redwood Clarke since 01.09.18) is an Association of Accounting Technicians (AAT) qualified accountancy & bookkeeping practice with offices in The City of London and Billericay, Essex. Offering a wide range of services including Self-Assessment Services, Annual Returns, VAT Returns, Credit Control, Payroll, Auto Enrolment Pension and Management Account services to high growth businesses across London, Essex and Hertfordshire.