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HOW TO GET READY FOR THE NEW TAX YEAR
Last updated: 08 Mar 2021 12:20
Posted in: AIA
The UK tax year starts on 06 April and runs to 05 April the following year. It’s the perfect opportunity to reflect on the previous tax year, understand any new legislation that might affect your clients tax return, and look for opportunities to simplify the process and even reduce their tax bill where possible.
Not sure where to start? Not a problem. We’ve asked Mike Parkes from AIA strategic partner, GoSimpleTax to give his best tips on preparing for a new tax year.
Digitalise the tax return process
If your client is still working with paper, let 2021/22 be the tax year you move them online. After all, paper tax returns need to be filed three months before the online one, and they’ll be phased out in a few years as part of Making Tax Digital (MTD) anyway. So, why not make the change now?
MTD is an initiative launched by HMRC to make it easier for the self-employed to keep on top of their tax affairs. From April 2023, they want all sole traders to submit their self-employed income and expenses online and on a quarterly basis.
What’s more, moving online can often remove some of the time, stress and mistakes that usually come with a paper tax return. There’s even dedicated tax return software, like GoSimpleTax, that’s designed to make it much easier to log income and expenditure throughout the year, and then submit this information straight to HMRC.
Record income through invoicing software
Once your client has moved their tax return online, whether that’s through software or HMRC’s Government Gateway, start requesting payment digitally with invoicing technology.
Invoicing tech formalises their payment process. Instead of sending over Word or Excel invoices, this software can send fully branded requests to their clients. They can also integrate with things like your Gmail account or your preferred payment solution, such as PayPal or SumUp.
Plan ahead to reduce your tax bill
The moment that the new tax year starts, you're free to file last year's tax return. My advice is not to wait, as tempting as it might be! This is the point where all your income and expenditure is fresh in your clients mind, so it’s far easier to collect up all the evidence and use it to submit an accurate tax return.
Filing a tax return early doesn’t mean you’ll have to pay your tax bill early, remember. It just means that you’ll get your bill almost a year in advance of its due date so that you can better manage your cash flow.
Even starting to complete one early has its benefits. It gives you time to review your clients expenses and find opportunities to make tax savings. You can save a fortune by identifying purchases that are classed as allowable expenditure, so why not give yourself time to check?
Rachel Rutherford, Director of Policy and Public Affairs concluded: “If you take these three key steps, your clients will be in a great position to file their tax return as soon as the new tax year starts – and then you can both get back to doing what you do best.
“If you are left in any doubt about any of the areas covered you can contact AIA directly and we will be on hand to provide guidance and support”.
"If you follow these tips your clients will be in a great position to file their tax return as soon as the new tax year starts – and then you can both get back to doing what you do best."