Are you ready for the new tax year?

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The 2017/18 tax year will be here soon, but are you prepared for it?

There are a number of tax changes that are being introduced in April. How these affect your business depends on your individual circumstances, the type of business and the sector in which the business operates.

VAT changes

Though most VAT rules stay the same, the government has made changes to the flat rate scheme. These will affect what is known as ‘limited cost’ businesses that spend less than 2% of their sales on goods. These are mainly service businesses such as hairdressers. The scheme affects the calculation on how VAT on purchases is deducted from VAT paid on sales. Exactly how these calculations are performed depends on the type of business.

Class 2 National Insurance

Class 2 National Insurance contributions are to be abolished in April 2018. For the 2017/2018 tax year, class 2 contributions will rise from £2.80 to £2.82. Contributions are mainly paid by the self-employed.

Company cars

New taxing bands for company for cars will be introduced. These favour ultra-low emission cars, particularly electric vehicles, in a bid to encourage businesses to provide environmentally friendly cars to their employees.

Disguised self-employed

As well as making sure that your business accounts comply with tax changes, it also helps to be prepared for future changes. One area that the government is concerned about is schemes that disguise workers as self-employed in order to avoid paying income tax, national insurance and other employee benefits. This could result in firms that operate these schemes having to bear the extra costs of employing people who they class as self-employed.

Save tax before the start of the new tax year

There are a couple of steps you can take to save tax before the current tax year ends:

•    If you are considering purchasing a major item of equipment, buying it at the end of the tax year means that you will get the capital allowance in the current tax year, rather than at the end of the new one.
•    If, as an individual, you haven’t used your full ISA allowance, then you should consider topping up your ISA.

If in doubt, outsource!

Making sure your new tax and VAT accounts are ready for the next tax year can feel daunting. To relieve the pressure, use an outsourcing accounts service, which can do all the work for you.