We’re fast approaching the end of the 2022/23 tax year and, like New Year’s all over again, you might be thinking about setting yourself some resolutions but this time, they’re business-related. Which means they should probably last longer than a couple of weeks (although there’s no judgement from us if your gym card is now gathering dust).
Before you even think about the changes you’re going to make – take a moment to reflect and pat yourself on the back.
We know running a business is extremely tough, but the added pressure of running one in London can be hard. The extra expenses, the huge amount of competition – it can feel like you’re operating with a never-ending migraine.
So, take a deep breath and be proud of what you’ve achieved over the 2022/23 tax year.
Once you’ve done that – the start of a new tax year is a great time to check that business plan and decide what needs to happen to make next year’s business goals a reality.
We have a few tips that may help.
Set realistic goals by looking at the previous tax year
New Year’s resolutions tend to fail quickly when they’re unrealistic, so your first stop should be analysing your business figures from the previous tax year. It helps you make sure you don’t set the bar too high!
For example, if you made a profit of £20,000 last year and now set a goal of £800,000, you could be setting yourself up to fail. We aren’t completely writing this off as impossible, but unless you have specific business plans put in place, it’s best to have a more realistic goal.
Add all your tax deadlines to your calendar
You can’t beat that fresh start feeling! Opening a new crisp journal, or in this case a clear blank virtual calendar, and jotting down the most important dates of the year.
Why does this help? Because you’ll always be one step ahead of your tax deadlines. Little hacks like setting reminders a couple of weeks before they’re due so it doesn’t creep up on you is a big help. Pair this with regularly updated bookkeeping and hopefully you won’t feel so rushed when it comes to submitting important documents like your accounts or your tax return.
Keep up to date with any tax changes
A lot of changes were made after the Autumn 2022 Financial Statement was announced. Here’s a breakdown of some key changes this year:
- From April 2023, business rates will change. The government has announced a £13.6 billion support package to relieve these costs.
- You can find out more on the government’s business rates factsheet.
- From 1st April 2023 the Corporation Tax rate will increase to 25% for businesses that report profits over £250,000.
- If your company reports profits up to £50,000, you’ll still pay Corporation Tax at 19%.
- Companies with a turnover between the two will receive marginal relief for a gradual increase.
- From April 2023 the dividend allowance will be halved to £1,000, and then halved again to £500 the following tax year.
- The 1.25 percentage points increase to dividend tax that took effect in April 2022 last year will stay in place.
- The additional rate threshold is going to reduce from £150,000 to £125,140, and this also has an impact on dividend tax because it might mean you end up paying the additional dividend tax rate (which is currently 39.35%) sooner.
Adjust your budget
Even if you’ve had years of smooth sailing with no change at all in your business, costs are rising so it’s very likely you’ll need to make some adjustments. Use your 2022/23 figures as a starting point to help you forecast what this tax year will look like.
This sort of data analysis doesn’t have to be an annual process either. Producing regular financial reports can give you a more accurate insight into what your budget for the year might look like, and see how this compares with your goals.
Just don’t forget about those tax bills!
Look at your expenses
Have you thought about the additional charges you need to pay working in London? All those short hops on the tube and ULEZ fees soon add up, and it’s all too easy to overlook them, especially when it comes to claiming expenses.
Keep a note of what you need to pay as you go about running your business, and ensure you claim any expenses you’re entitled to. It may not seem much, but when you hear there’s £925 million of expenses regularly going unclaimed, it all adds up.
27% of London business owners said they hadn’t claimed any of their expenses due to lost receipts and invoices. If you regularly lose your receipts or struggle to keep things up to date, it could be worth looking into bookkeeping software which includes a mobile app, so you can snap receipts and upload them as you go.
Maintain good bookkeeping habits
If there’s anything that’ll get you off to a good start this tax year, it’s good bookkeeping habits!
Running a successful business is much more difficult without reliable bookkeeping records to help you understand what’s going on in your finances. Keeping everything up to date means you’re more likely to make better decisions, and keep those budgets on track.
After all, you’re not psychic (as far as we’re aware). If you regularly misplace receipts or sometimes forget to properly record your transactions, you’ll be missing out on all those allowable expenses, and might even find yourself in a bit of a pickle with your spending!
Have you thought about getting an accountant?
It’s important to know you don’t have to do this all alone.
You can hire a London-based accountant who you can meet up with regularly, face-to-face, or you can find an online accountant that can assist you wherever you are. Whichever works best for you, accountants can save you a heap of time.
They’ll have your business’s interest at the heart of what they do, finding ways to reduce taxes where possible, and making sure you never miss out on any grants you’re eligible for, or claiming any expenses!
Having an expert on hand can take the pressure off while you’re busy running your business.
Find more support and guidance for London-based businesses in our online information centre.