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Five ways to ease the pain of your January tax bill

Five ways to ease the pain of your January tax bill

For many professionals, the rising costs of running a business has led to greater concerns over paying their annual tax liabilities. With the 31 January self-assessment payment deadline approaching, the following five tips highlight how professionals can ease the pressure on their finances and gain better predictability over their monthly expenditure by funding large one-off expenses.

Keep your financial records in order - maintaining detailed and accurate financial records is an important step towards assisting you to manage, spend and invest your money more wisely.

For tax purposes, financial records must be kept for seven years relating to your income, earnings and business expenditure so keep an up-to-date file of invoices and receipts.

In addition, make sure you record details relating to any pension contributions and gift aid donations as this information is also required when completing your tax return.

Reduce your tax bill with capital allowances - Capital Allowances entitle businesses to claim a valuable source of tax relief for certain capital expenditure, therefore improving cash flow.

For example, the Annual Investment Allowance (AIA) is a capital allowance that enables firms to write off the cost of certain assets in full against profits in the year in which the expenditure is incurred.

Qualifying items include specialist equipment, IT and technology related investments as well as heating, air conditioning and lighting.

Until 31 December 2018, the AIA limit is currently set to £200,000 but this will temporarily increase to £1million for two-years from January 2019, providing a valuable tax saving concession.

Claim all the tax breaks you are entitled to - some professionals miss out on claiming all of the tax deductible expenses they are entitled to which relate to them doing their job resulting in them paying more tax.

If you are self-employed, you can claim tax allowances on expenses including professional membership fees and subscriptions, specialist equipment, as well as sales and marketing promotional materials. In addition, you can claim business mileage or fuel, excluding commuting to your normal place of work.

Appoint an experienced accountant - specialist accountants help partners to more easily understand and plan for their tax liabilities when embarking on self-employment.

This extends to advising when you need to pay tax to ensure you don't miss any deadlines, what financial records you need to keep and ensuring you claim all the tax reliefs available.

Spread the cost of your tax liabilities - alternative finance providers, such as Wesleyan Bank, offer funding for tax bills to enable professionals to preserve cash flow without compromising their existing banking lines.

Unsecured loan facilities allow you to spread the cost of tax liabilities in a flexible way, over a term of six or 12 months. Busy professionals also have the convenience of being able to apply for tax funding online in minutes through user-friendly digital services.

Concerns around the unpredictability of Brexit are likely to be felt for some time. But regardless of the eventual outcome there are some clear trends emerging which are directly impacting UK businesses.

Increased cost pressures, rising competition and the need to invest in both technology and people mean that the need for professionals to diversify and offer specialist services to demanding clients has never been more important to stay ahead of the game.

Specialist financial providers who implicitly understand the challenges professionals face today will continue to offer tailored funding solutions to support the longer-term investor and forward-thinking practices.

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'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

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