With tax laws constantly evolving, small and medium sized businesses (SMEs) need to stay informed to avoid costly mistakes and ensure compliance. Here’s what you need to know about what to do when tax requirements change.
Stay updated on tax deadlines and rules
Tax deadlines and requirements can change annually, and failing to keep track can lead to penalties or missed deductions. Make it a priority to stay informed about important deadlines, including VAT, self-assessment, and corporate tax filings. A qualified accountancy practice like Evolve Accounting, can help ensure that your business remains compliant with HMRC regulations and avoids unnecessary fines.
Understand available deductions and reliefs
Tax reliefs and deductions can help reduce your overall tax liability, but they’re often overlooked. For instance, small business owners may be eligible for the Annual Investment Allowance (AIA), which allows you to claim on qualifying business expenses like equipment and machinery. Keep track of your business expenses and work with an accountant to ensure you claim all relevant deductions, including those for office supplies, travel expenses, and professional services.
Review your business structure for tax efficiency
Depending on how your business is structured—whether you’re a sole trader, limited company, or partnership—your tax obligations will vary. In some cases, restructuring your business can reduce your overall tax liability. For instance, some business owners may benefit from switching to a limited company to take advantage of corporation tax rates. It’s worth reviewing your business structure with a financial expert to determine if a change could improve tax efficiency.
Plan for new tax initiatives
New tax initiatives, such as Making Tax Digital (MTD), are being rolled out to simplify tax filing processes. However, they also require businesses to keep digital records and use compliant software for submitting returns. If you haven’t already transitioned to a digital accounting system, now is the time to start. Software like Xero can help you streamline tax submissions and ensure you’re prepared for MTD deadlines.
Keep an eye on changes to allowances and thresholds
HMRC frequently updates tax allowances and thresholds, such as the VAT registration threshold or the personal allowance for income tax. These changes can affect how much tax your business owes, so it’s essential to stay on top of any adjustments. For example, if your business’s turnover exceeds the VAT threshold, you’ll need to register for VAT and ensure your pricing and invoicing reflect this.
Did you know?
At Evolve Accounting, we specialise in helping SMEs navigate tax changes. Our team stays updated on the latest regulations, ensuring your business is always compliant and tax-efficient. Contact us today for expert advice.
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