Company Tax - Getting The Timing Right
Getting the Timing Right
A potential area of interest to post company formation clients. The timing of certain company 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 your tax bill and defer payment until the next tax year.
DO Ensure that charges on income (for example, annuities and royalties) are paid before the year end Ensure that any provisions in the company accounts made are against specific costs, not a general estimate Ensure that any company pension contributions are paid before the year end Consider whether any additional remuneration/bonuses should be voted to company directors in respect of the current accounting period (these can be paid up to nine months after the year end) Ensure that you value stock and work in progress taking into account any reduction arising as a result of obsolescence. Plan to bring forward any capital expenditure into the current accounting period DON’T Sell assets, such as company 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 company bank manager may wonder if that lending was such a good idea after all! Sell company assets on which capital allowances have been claimed until after the year end. Do call us on 0207 608 5500, if you would like further help or advice on this subject.
