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Companies - getting the timing right

Do’s and don’ts of timing payments and receipts for tax purposes.

By timing payments or receipts carefully around the year end, companies can save money. Lawrence Grant can advise companies in the Harrow area…

The timing of certain 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 the current year’s tax bill and/or defer payment until the next tax year.

Do

Ensure that qualifying charitable donations are paid before the year end
Ensure that any provisions made are against specific costs, not a general estimate
Ensure that pension contributions are paid before the year end
Consider whether any additional remuneration/bonuses should be voted to directors in respect of the current accounting period (these can be paid up to nine months after the year end although the PAYE and National Insurance may need to be paid sooner than that)
Ensure that you value stock and work in progress taking into account any reduction arising as a result of obsolescence
Consider the effect of bringing forward any capital expenditure into the current accounting period to fully utilise reliefs available each year

Don't

Forget to consider the timing of disposal of assets such as property or shares that will give rise to a large chargeable gain to ensure that in year reliefs are utilised
Forget that timing of expenditure will also have an effect on your accounts
Forget to consider the timing of selling assets on which capital allowances have been claimed.

If you are a company in the Harrow area and would like help with timing payments and receipts to reduce the tax bill and save money, contact Lawrence Grant.