Date posted: 19th Dec 2018
Lee Watson, Tax Director, is urging businesses to consider tax and financial planning as a must do for 2019.
His top tips checklist offers advice and guidance to support business owners to navigate the tax system:
- Prepare for ‘Making Tax Digital’ (MTD) – set to start with VAT. MTD means that businesses must not only submit their VAT returns via software from April 2019 but must also keep their VAT records in a digital format. The MTD legislation is intended to be rolled out for income tax and corporation tax in 2020 so businesses need to be prepared and ensure that their computerised systems can cope with the transition.
- Make use of the annual investment allowance (AIA) – the AIA limit increased to £1m on 1 January 2019, which means that businesses can spend up to £1m on plant and machinery and achieve a full tax write-off in the year of purchase. Timing of expenditure is, however, critical to ensure that the full £1m allowance is available and will need advice from an accountant.
- Tax reliefs and allowances – ensure full use of 2018/19 tax reliefs and allowances ahead of 5 April 2019. Most allowances including personal income tax and capital gains tax allowances cannot be carried forward, so they are wasted if they are not used.
- Entrepreneurs relief (ER) – there have been numerous tweaks to ER over recent years, including some major changes at the last Budget. This could impact on those individuals looking to sell a business in the near future or even seeking a third-party investment. A tax expert can advise regarding ER status.
- Focus on retirement – in recent years there have been numerous reductions to pension tax reliefs. Take advantage of this generous tax relief now. The Chancellor hinted at a further budget in the Spring, depending upon the Brexit negotiations, so pension tax relief could be reduced further. Our advice is to act sooner rather than later.
- Check sub-contractors’ tax status – the government is switching the onus of determining tax status from the sub-contractor to the contractor from 2020, which means that the main contractor will be required to determine if a sub-contractor or consultant should be a PAYE employee based on conditions set by HM Revenue & Customs. It may be that tax and NIC contributions should be deducted from payments made to them. It is not expected that this will impact small businesses but small is yet to be defined. Undertake the check in 2019 to be ahead of the game.
- Undertake inheritance tax (IHT) planning – research suggests that 60% of UK adults don’t have a will. A will is an important part of any IHT planning but should be drawn up with input from a tax adviser and solicitor to ensure that advantage is taken of the numerous reliefs available. Even with a Will, it is important to ensure that this is regularly reviewed and updated.
- Salary sacrifice schemes – again numerous changes have been introduced to limit the tax advantages of such schemes, some of which may only impact when an employee changes their company car, for example. Contact an accountant to understand how these changes impact your business and employees.
- Access grants – there are numerous grant funds available for Tees Valley and Yorkshire based businesses to support investment in growth and diversification projects, which lead to job creation or, in some cases, safeguarding. Some of these schemes will close in 2019 so it is important to act quickly to benefit from the opportunity.
Lee Watson said: “2019 looks to be an intriguing year, not least with the Brexit date set and the introduction of ‘Making Tax Digital’ only a few days later.
“It is important that businesses make tax and financial planning a priority in 2019. Businesses will often seek savings in utility costs, transport and rates but tax is a significant cost to any business and the business owners personal tax liability and savings shouldn’t be forgotten.
“There are many other tax planning opportunities that the Government continues to promote including research and development tax reliefs, the new structural and buildings allowance and EMI share schemes.
Make it your New Year’s Resolution to undertake financial and tax planning with your accountant or tax adviser so that you start the New Year on a good financial footing.”
Get in touch to see how we can help you in 2019.