It’s that time of year again – the January tax payment deadline is just around the corner. Due to the nature of our tax system, on 31st January you will be paying tax based on your income in the year to 5th April of the previous year – which probably feels like a long time ago!
Unfortunately, because it was such a long time ago, there is probably very little you can do to affect the amount of tax due at the end of this January – so this begs the questions, what do you do if you are disappointed with your tax bill?
You may be disappointed because your tax bill is way over the amount you were expecting to pay or you may be fully prepared for your tax bill but have a niggling feeling that you are still paying over-the-odds for what you are earning.
No matter what level of disappointment you are feeling, the question you have to ask is – are you, and your accountant, being as proactive as you can be in this ever-changing world?
You see, we live in an age where more and more things are clamouring for our attention, and so often our business finances can take a back seat. For some reason, we tend to take on trust that our finances will look after themselves, and that HMRC will only charge a “fair” amount of tax. On so many occasions we see sole trader, and larger business owners fall foul of some aspect of tax that they weren’t fully aware of, or prepared for (for example, the rise in dividend taxes; sudden jumps in “Payments on Account”; Section 455 tax on funds loaned from a Limited Company). All of these things could be somewhat mitigated (or at least prepared for) had more proactive steps been taken.
So, if this resonates with you, what do you do now?
Unfortunately, there is not much to do about your tax bill due this January – however now is the perfect time to look towards your next year of tax. If your year end is the 31st March, there are only a few months to take stock of your finances and ensure that you are prepared for what is coming your way next January – and possibly take steps to save money. Whether that is by putting money into a pension; beginning to build up a tax savings account to make sure you are never unprepared again, or something more tailored to your circumstances.
Now is also time to get in touch with your accountant to see if they have any ideas or advice on how you should move forward – they are there to help with these things. Call Hive on 01872 300232 or email us at firstname.lastname@example.org.