The year 2020 is a leap year; therefore, February has an extra day in it. Traditionally it is said that a woman can propose to a man in a leap year but what has this extra day got to do with you and your business or your career?
Why not see it as an extra day to get something done which will benefit you for the year(s) ahead? Spend the day getting to grips with your tax planning!
Hi, I’m Anna Goodwin – Author of five books, Director, Mentor, and Trainer for Anna Goodwin Accountancy.
Basically, I take the stress out of finances – both business and personal. From running my own business and helping others to run theirs, I know it’s important to take time to plan so your tax affairs are as efficient as possible.
I know that tax planning may not be the most exciting thing to consider doing on your extra day, but it is worth it. Consider it a different sort of ‘me’ time. It is also timely, given how close we are to the end of the tax year.
Tax planning should include a number of questions and suggestions to consider before the end of the tax year: –
- Have you used up your ISA allowance?
- Have you made use of your pension contributions allowance of up to £40k?
- Should the 2020/21 tax year be when you start to employ your spouse?
- Do you need to make any capital purchases? If so, consider doing this before 5/4/20 so that as a sole trader you receive the AIA (annual investment allowance) as early as possible.
- What about Making Tax Digital (MTD)? Are you getting close to having a turnover of £85k (which is the threshold for MTD becoming mandatory)?
- Do you need to take account of this in your planning?
- Would moving towards using accounting software make your business more efficient?
- If you are a director of a company, have you taken advantage of your £2k tax-free dividend allowance?
- If you have a company, remember to utilise your full basic rate tax band for both you and your spouse.
The other key consideration is whether you are using all of the tax tools available? HMRC, over the years, has tried to make it easier for individuals/businesses to manage their own tax affairs.
There are various things you can do: –
Set up a personal tax account, this will enable you to: –
- Check and change your address.
- See what tax code you’re on and how it’s calculated.
- Check your state pension and National Insurance record….and much more!
You can print your SA302: –
- This will give you evidence of your earnings and can be done for the last four years.
- You can print both your tax calculation and tax year overview.
You can use HMRC tools and calculators: –
- These cover PAYE, self-employment, tax credits and more…
So, take the opportunity this week to think about your tax situation – is there anything you need to do to make your situation more efficient? Are there any allowances you need to utilise?
Next week, I will be looking at the issues that occur if your earnings differ from those of your partner.
Do you want to stay in control of your finances? Why not join my online group? I also offer 121 Mentoring and Accountancy services. If you would like more information, get in touch or visit my website.