Business tax

If you run a business - whether it's a sole trade, a partnership or a limited company - the end of your accounting period is the most important date for tax planning. You can move income and expenditure from one year to another, changing the rate of tax and delaying tax payments, by reviewing your plans for purchases and sales of capital assets or the payment of bonuses, and other significant expenses.

There are a number of interesting VAT initiatives for smaller businesses in the 2001 Budget, extending and improving two of the simplified schemes (cash accounting and annual accounting), and if you are not already using these, it may be worth considering them.

If you operate through a "personal service company" - a company which provides your services to clients who would otherwise be regarded as your employer, if the company was not there - you need to consider the effect of the "IR35" rules on 5 April 2001. The new tax charge has received widespread publicity since it was announced two years ago, but this is the first time that most people will actually have to calculate and pay the tax, and it will be a learning experience for all concerned. It is unlikely to be a pleasant one!

Actionpoint:

HAVE YOU REVIEWED THE LIKELY TAXABLE PROFITS BEFORE YOUR YEAR END? ARE YOU A "SMALL BUSINESS" FOR VAT? ARE YOU AFFECTED BY IR35?

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