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Companies - getting the timing right
By timing payments or receipts carefully around the year end, companies can save money. Attwoods can advise you….
The timing of certain payments and receipts of income is crucial for tax purposes. By moving a date of payment or receipt by just a few days either side of the company’s year end, you can reduce the tax bill and defer payment until the next tax year.
Ensure that charges on income (for example, annuities and royalties) are paid before the year end
Ensure that any provisions made are against specific costs, not a general estimate
Ensure that any pension contributions are paid before the year end
Consider whether any additional remuneration/bonuses should be voted to directors in respect of the current accounting period (these can be paid up to nine months after the year end although the PAYE and National Insurance may need to be paid sooner than that)
Ensure that you value stock and work in progress taking into account any reduction arising as a result of obsolescence
Consider the effect of bringing forward any capital expenditure into the current accounting period
Sell assets such as property or shares that will give rise to a large chargeable gain, until after the company’s year end
Forget the effect this will have on your accounts as if you reduce your profits, the bank manager may wonder if that lending was such a good idea after all!
Sell assets on which capital allowances have been claimed until after the year end
If you are would like help with timing payments and receipts to reduce the tax bill and save money, contact Attwoods.
The practices of Attwoods are carried on by Attwoods Accountants Limited, Attwoods Business Services Limited, Attwoods (Bromsgrove) Limited, Attwoods (London) Limited and Attwoods CCA Limited. Regulated for a range of investment business activities by the Association of Chartered Certified Accountants.