The value of a pre-year-end tax planning meeting

For a number of years now we have been offering our clients a pre-year-end tax planning meeting, and these are becoming increasingly popular.

Having worked in the profession for almost 22 years, I can remember how most clients would come in for a meeting once a year to go through their annual accounts and tax returns. In many cases this was more of a ‘signing off’ meeting, usually held more than 6 months after the year end, and it was rarely proactive since, to coin a phrase, ‘the horse had already bolted’.

Fast forward to today and annual signing off meetings are fast becoming a distant memory at KRW, as we work hard to help our clients to save tax, and this is best achieved by forward planning.

We typically meet 4-10 weeks before your financial year-end and use interim figures for the current year-to-date to project likely profits for the year and the associated Corporation Tax based thereon, while also projecting personal tax bills based on your salary and dividends from the company.

Since Corporation Tax bills are not due until 9 months after the end of the company’s financial year, the first key benefit of the pre-year-end tax planning meeting is to give plenty of advance warning of expected tax liabilities. This is far better than finding out your tax bill a few months before it is due…

However, the main benefit of the meeting is that we can discuss ways to mitigate your tax liabilities. In some cases it might be possible to put more money into your pension, or perhaps buy new capital equipment, both of which would need to happen before the year end to attract a tax saving in that year. Its also a great opportunity to check whether any other reliefs might be claimable, such as R&D tax credits.

Furthermore, a check of salary and dividend income for the year-to-date helps to plan ahead for personal tax liabilities. In many cases, something as simple as the timing of dividends can help to make best use of available tax bands and allowances, and to ensure that further taxes such as the High Income Child Benefit Charge are avoided, where possible.

Finally, it is a great opportunity to see how your business is performing, against previous years and any targets you may have set. While there is a tax focus to the meeting, it is a great chance to discuss the business more generally, and any issues you might be facing.