As the sun (hopefully!) continues to shine, your mind is probably a million miles from spreadsheets and tax returns. But here at Rogers Spencer, we think August is a hidden gem for getting your financial house in order. Amongst the welcome distractions of holidays and BBQs, you have the perfect opportunity to get a head start on your tax planning.
You might be thinking, “Why August? My tax return isn’t due until next January!” And that’s precisely the point. The end of the financial year (April 5th) feels like a distant memory, and the looming deadline of January 31st for self-assessment is still far enough away that you can take a proactive, rather than reactive, approach.
1. A Clearer Picture of Your Financial Year-to-Date
We’re now well into the new financial year, so you have a solid four months of data to work with. This provides a much clearer picture of your financial position than a review in April or May would. By looking at your income and expenses from April to July, we can more accurately project your likely profit for the full year. This projection is crucial for effective tax planning.
For Sole Traders and Partnerships
Are your sales up or down compared to last year? Have there been any significant one-off costs? Knowing this now allows us to model your tax liability and identify strategies to reduce it.
For Limited Companies
We can get a much better sense of your likely corporation tax bill. This is also a great time to review your dividend strategy and consider the most tax-efficient way to extract profits from your business.
2. Time to Take Advantage of Allowances and Reliefs
Many tax-saving opportunities need to be implemented before the financial year ends. Waiting until January leaves you with very little time to act. By conducting a review in August, we can identify these opportunities and give you plenty of time to take action.
Pension Contributions
Making pension contributions is one of the most effective ways to reduce your tax bill. The sooner you make them, the longer they have to grow. An August review gives us time to calculate your maximum tax-efficient contribution for the year.
Capital Expenditure
Thinking of buying new equipment or a company vehicle? An August review can help us ensure you’re making the most of Capital Allowances, such as the Annual Investment Allowance (AIA), which allows you to deduct the full cost of qualifying items from your profits.
Spousal and Family Planning
Are you making the most of the marriage allowance? Are there opportunities to transfer assets to a spouse in a lower tax bracket? Planning for this now, well ahead of the tax year end, is much more effective.
3. Beat the Rush and Gain Peace of Mind
Let’s be honest, the period from October to January is a whirlwind for accountants and business owners alike. By tackling your tax planning in August, you can avoid the pre-deadline stress and gain a valuable sense of control and peace of mind. You’ll know exactly where you stand, what your likely tax bill will be, and, most importantly, what steps you can take to reduce future liabilities.
August isn’t just about taking a break; it’s also a fantastic opportunity to pause, reflect, and prepare. Don’t let the summer lull be a wasted opportunity. Get in touch with us today to schedule your August tax planning review and make sure you’re in the strongest possible financial position for the year ahead.
Robin Maxwell
Robin MaxwellRobin Maxwell is a partner of Rogers Spencer and has been working with us since 2003. Robin specialises in Accountancy Solutions, Audits and Tax and VAT. Find out more about Robin here.