It’s all too easy to think that as we approach the new tax year on 6th April there is plenty of time to deal with anything tax-related.
Let’s face it, if you’re a small business owner there are a multitude of other things to do.
But there are some important changes coming up, and understanding them now if you are starting a business will allay any last-minute panics and help you feel in control.
From 1 April, the Making Tax Digital scheme requires VAT-registered companies to keep digital records and use software for submitting their VAT returns.
As part of this scheme, you can also send updates to HMRC in place of filing a self-assessment tax return – a great way to keep on top of your affairs. You’ll find more details on the HMRC website.
If you’re running a UK-based business, you’ll need to know about other changes that take effect from 6th April.
The personal allowance threshold goes up to £12,500 while that for the higher rate of 40% income tax increases to £50,000.
While the dividend allowance remains the same at £2,000, increased limits means you can take more in dividends before having to pay the higher dividend tax rate. Find out more about dividends on the HMRC website.
The National Minimum Wage and National Living Wage also increased on April 1st. Find out more about these here.
Benefit in kind rates also increase from 6th. Find out more about tax on company benefits here.
The amount you can pay into a personal pension tax free stays at £40,000 per tax year, though there will be an increase in the minimum amount you are required to pay into workplace pensions. Read up on them here.
Of particular interest to those setting up a business is Entrepreneurs’ Relief, allowing you to pay less capital gains tax when you sell all or part of your business.
For 2019/20, the minimum qualifying period will increase from 12 to 24 months.
Corporation tax will remain at 19% and the good news is that the government has plans to reduce this to 17% for the 2020/21 tax year.
Of course, this is a summary and there is a lot to get your head around as a business owner, from VAT, Corporation Tax, and PAYE to NI and pensions.
Research your requirements and get help to understand them to make it easier to stay on top of your tax affairs day by day.
There’s nothing worse than sticking your head in the sand and ending up with a fine and a whole lot of stress.
Yes, it may be daunting but finding out your tax obligations and getting ahead at the start of the tax year will reap rewards later on – knowledge is power, after all.
Happy new tax year!