With the festive season approaching, many companies are closing for the holidays. But for some companies 31 December marks their annual year-end date. So in preparation, we want to give companies with a year-end date a few tips!
Tip 1 : Super-deduction Capital Allowance
The super-deduction and special rate first year allowance (SR allowance) temporarily increase reliefs for companies on qualifying expenditure on plant or machinery from 1 April 2021 to 31 March 2023. You can qualify for super-deduction capital allowance if:
- Your company is subject to Corporation Tax
- You incurred the expenditure on or after 1 April 2021, but before 1 April 2023
- You did not buy the plant and machinery due to a contract you entered into before 3 March 2021
HMRC has launched an interactive tool for you to check whether you can qualify for the super deduction capital allowance. This would allow you to write off 130% of cost against your profits for 2022 if the purchase was completed before 31 December 2022.
Tip 2: Investigate Optimal Year-End dates
If you are expecting profits to reduce in the first quarter of 2023, perhaps making a loss in this period, would it reduce your corporation tax bill if you extended your accounting date to 31 March 2023, and use the first quarter losses earlier? This is something important to consider for all companies to manage their finances optimally.
Tip 3: Get Ready For 2023
Being a business owner comes with a lot of responsibility. This includes taking a holistic look at the year that has passed. A good way to look at your financials include
- Which months brought in the most profits?
- Which area or services of the business made the most profits?
- What went wrong this year?
- What did the company do right this year?
- Did we stay within budget this year?
These questions will help you tailor a better budget and plan for the business moving forward. Identifying areas for growth as well as areas that are performing optimally can help you make more informed decisions in 2023.
2023 is likely to be a challenging year with a projected recession, continuing high inflation and upward pressure on interest rates.
If you are unsure which strategies to put in place to manage your financials effectively, feel free to contact us:
