Tax Efficiencies In A Downturn

Chamber member, accountants PDC Online have put together this handy list of tips for keeping on top of your tax:

In these Tough times it is wise to conserve as much of your hard earned cash as possible.

Check your tax code

Most people will have recently received their tax code. It is a good idea to review your tax code to ensure that you are paying the correct amount of tax. An incorrect tax code could mean that you are paying too much or too little tax.

Avoid Penalties

One of the key ways, is to look after loose ends, like tax bills and you need to ensure that you register or pay on time. Also in April 2009, mistakes on returns will be assessed to penalty using a completely new system which focuses on the behaviour of the taxpayer which led to the inaccuracy. The new rules will penalise incorrect returns which result in an underpayment of tax (or a potential underpayment in some cases) according to the seriousness of the behaviour which produced the understatement.

Business Support Service

Since 24 November 2008 HM Revenue & Customs (HMRC) introduced a new, dedicated Business Support Service designed to meet the needs of businesses affected by the current economic conditions.

If you’re worried about being able to meet tax, National Insurance or other payments owed to HMRC, or you anticipate that payments coming due will cause you problems, you can get in touch with them to discuss payment options to help you deal with temporary cashflow difficulties.

You can call the HMRC Business Payment Support Line on 0845 302 1435. The helpline is open seven days a week.

HMRC staff will review your circumstances and discuss temporary options tailored to your business needs, such as arranging for you to make payments over a longer period. They will not charge additional late payment surcharges on payments included in the arrangement, although interest will continue to be payable on those taxes where it applies.

Tax Planning and Monitoring

Ultimately, tax planning is the best way to ensure tax efficiency. This involves assessing your income and expenses and developing strategies that legitimately minimise the amount of tax you owe.  You also need to decide how you’re going to meet any tax obligations if they arise.  Tax planning is more complex for the self-employed and those with income from rental properties.  The key thing is ensuring that you claim all allowable expenses in arriving at your profit. 

You are advised to speak to a qualified accountant to ensure that you are claiming the maximum deductions.