5 Top Tips for Starting the New Tax Year

March 31, 2023 by Christine Frith

With the new tax year approaching on 6th April, it is a fantastic time to finish tasks and plan for the new year ahead. This will set you off with good habits that place your business on a successful trajectory.  

Here’s our top 5 reminders of things to do right now.

Get organised!

The topic of tax is often ignored until deadlines are looming. Then it becomes a time of panic as you desperately try to find lost receipts and wade through a year’s worth of payment reconciliations.  

With a little organisation, you can keep on top of your accounts and filing so that corporation tax and self assessment deadlines aren’t as daunting. We highly recommend a simple filing system or even better, using online software, such as Xero <link>, that automatically sorts receipts and matches payments to invoices.  If it all still feels like too much admin, then use an experienced bookkeeper such as Hour Hands to set up processes and add rigour. It will buy you peace of mind in the long run.

Claim all of your expenses

Whether you’re working as a limited company or as a sole trader, claiming all your expenses is a sensible way to take money out of your company in a tax-efficient manner. You can also lower the amount of corporation tax due, which will be hugely beneficial in the 2023/24 tax year. <link to blog> 

You can claim a wide range of business expenses, including:

  • Stationery
  • Computers and software
  • Work uniform. (as long as it carries the company logo – clothing for personal use cannot be claimed, and general business attire cannot be claimed as a uniform expense.)
  • Protective work clothing (e.g. eye goggles, if it’s a business necessity)
  • Some forms of travel. (e.g. journeys that are made for work purposes outside of your normal commute)
  • Business mileage

Get ready for corporation tax rises and dividend allowance reductions

From 1st April, the UK’s main rate of Corporation Tax (CT) will increase. From 6th April, the dividend allowance will be reduced to £1000.  

Directors and shareholders need to plan for the cash flow implications of these increases on the business and understand the personal tax implications on any dividends taken from the business. It may be worth considering taking a larger dividend in the 2022/23 tax year but please discuss with your accountant prior to taking any action.

Pay yourself and others fairly and on time

From April 2023, all workers over the age of 23, except those in the first year of an apprenticeship, are entitled to be paid at least £10.42 per hour – the National Living Wage. Remember to keep payroll documentation for three years to prove that you are paying the National Living Wage.

If you are a business owner or a freelancer, now is a good time to review your rates. It is important to ensure you are being paid appropriately, especially in light of rising costs. It is important for boosting your self-worth and keeping yourself motivated too.  

Remember, if you use Real Time Information (RTI) software to send details of salary payments to HMRC. Update this software at the start of each new tax year.  It may be worth outsourcing payroll to a payroll specialist, particularly if this is an area where you often struggle to remember all the relevant legislation.

Important dates: 

19th April: the deadline for the final submission of the 2022/23 tax year

22nd April: deadline for month 12 PAYE

Complete the payroll paperwork – P60, P9X and P11D

Every employee who is working for you on the final day of the tax year (5th April) needs to receive a P60 from you by 31 May. This includes deemed employees who are now on your payroll because of the Intermediaries Legislation (IR35). Generate P60s using your payment software – this document summarises all pay and deductions made over the entire year. Issue P60s by 31st May.

Whilst the P60 ends the tax year, checking the P9X starts it. Before you start month one of the payroll, you need to check the P9X . This HMRC published document explains what tax codes employees must use for each employee.  

P11D forms report any expenses and benefits received by each employee to HMRC. Submit P11D and P11D(b) forms by 6th July. Make payments of class 1A National Insurance contributions on Benefits in Kind to HMRC by 22nd July.

How you can benefit from the super efficient Hour Hands team!

With willing and able bookkeepers on hand, Hour Hands is always available to complete these tasks that you just don’t have the time or capacity to do yourselves. We’re also here for guidance and sharing information that helps you run a successful business or home. 

To find out more simply call us on 01727 818262. We will ask how we can support you and offer a solution either on an hourly rate or package cost. The choice is yours as we’re simply here to help.