Businesses accessing Government financial support during the ongoing Covid crisis should make end of year tax planning a priority .
That ’ s the view of the expert accountancy team at Optimum Professional Services , who believe limited company directors and – in particular – sole traders and partnerships should take steps between now and the end of the financial year in April to identify their likely tax exposure .
Michael Blaken , Accounts Director at Swindon-based Optimum , says grants such as the one-off £ 10,000 available for small businesses with premises , and the Self-Employment Income Support Scheme for sole traders and partners may result in larger than usual tax bills falling due next year . This could be at a time when cashflow is tight and all business support has ended .
“ We have a number of clients , for example , who received the small business grant and who also applied for one or more rounds of the SEISS payments , because their businesses had been adversely affected by Covid ,” said Michael .
“ However , these grants all count as taxable income so must be added to their profits . If their year-end falls in the early months of the tax year - April , May , June for example - then they are always paying tax based largely on the previous year ’ s profits . Regardless of the year end , all of these business support payments are added to the profits in the year and for some these amounts may be higher than the dip in profits from the impact of Covid .”
Through a careful tax review and subsequent planning , the overall liability could be reduced , or as a minimum the business owner made aware of the future tax liabilities to leave plenty of time to save for the tax payments that will be due .
Michael added , “ We have been advising our clients to put away 20 per cent of any Covid grants , if they can , to help cover their tax bill and also supporting them with tax planning to ensure they can meet their obligations .”
So what better way to support your loved ones than by leaving a will . It means that , when you die , they have one less stress to worry about because all your wishes have been formally documented and can be carried out . If you have yet to write a will , then you are not alone . Remarkably , some 60 per cent of the UK adult population have failed to do so . Yet if you die without making a will , the law of intestacy applies and it can take many months to settle your estate . Before you draft your will – and it is highly recommended that you use professionals , such as the wills and probate team at Swindon-based Optimum Professional Services – here are some important considerations .
There are DIY kits available but they are by no means foolproof and things very often go drastically wrong , with the will being held invalid . While this may appear a cheaper option , in the long-run it may cost more . It ’ s far better to engage a professional to write your will , unless you have the knowledge and expertise required .
Executors are responsible for ensuring your wishes are carried out after you die . It is an important role , potentially handling large sums of money and property , so choose carefully and , of course , ask their permission first . If you are married or in a civil partnership you are likely to appoint your spouse , but it is sensible to have a second or even a third executor , just in case your spouse is unable to act .
If you have dependent children , it is important to appoint guardians . If you die and there is no living parent , the court will appoint a guardian for children under the age of 18 , unless you have specified someone .
If you want to gift some specific items to someone in particular , then you should detail this within the will . It will avoid all sorts of arguments later .
It is important to sign your will in the correct way otherwise it will be held invalid for lack of formality . This is why it is so important to engage a professional to guide you through the correct procedures .
If you are incorporating a trust in your will , or if your beneficiaries might be under 18 when you die , then you need to appoint trustees to look after the inheritance . Your executors and trustees are usually the same people authorised under your will , but they don ’ t have to be . These should be people who you trust to make the right decisions for the beneficiaries
By all means keep copies of your will , but ensure the original is stored in a proper facility where it will be safe from fire or flood . Optimum stores clients ’ wills free of charge . Don ’ t hide your will – it ’ s of no use if it cannot be found .
THE BUSINESS EXCHANGE 2021 17