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Business tax planning for 2019/20

As the end of the year draws closer, it’s a good idea to look ahead to what’s in store for your business when the new tax year begins in April 2019.

Identifying the changes that could affect your business is the first step towards making an effective plan for the year ahead and minimising your tax liability.

To save you some time, we’ve narrowed the many tax changes down to three main areas.

Corporation tax

The main corporation tax rate is set to stay the same for 2019/20, at 19%.

Capital allowances

You may be able to reduce the amount of corporation tax you need to pay by claiming capital allowances on items you keep to use in your business.

These items, known as plant and machinery, could include equipment, machinery or business vehicles. You can claim some or all of the value of plant and machinery from your profits before tax.

There are three types of plant and machinery allowance:

  • the annual investment allowance
  • first-year allowances
  • writing-down allowances.

The annual investment allowance is set to rise to £1 million for two years from 1 January 2019, so this may be an opportunity for your business to increase its investments and still benefit from the relief.

Other reliefs

Don’t forget to check which other tax reliefs might apply to your business. These could include:

  • Research and development
  • The patent box
  • Creative industry tax reliefs
  • Disincorporation relief.

Employee wages

If you’re an employer, you might be looking at reviewing pay for your staff in the next year.

The national living wage, which applies to employees aged 25 and over, is increasing to £8.21 an hour from April 2019. For other age groups, the minimum rates are as follows:

Employee age

2018/19 hourly rate

2019/20 hourly rate

25 and over

£7.83

£8.21

21 to 24

£7.38

£7.70

18 to 20

£5.90

£6.15

16 to 17

£4.20

£4.35

Apprentices*

£3.70

£3.90

*This rate applies to apprentices under 19 years old, or in the first year of their apprenticeship.

VAT

The VAT-registration threshold will stay the same in the 2019/20 tax year, at £85,000.

If your business is VAT-registered and has a taxable turnover above this threshold, the first mandatory stage of Making Tax Digital will apply to you from 1 April 2019.

This will mean a significant change to the way you file your VAT returns. We can let you know your obligations under the scheme, and help you prepare.

Contact us

Looking at these areas should help you make a start on your plans for 2019/20, but there’s much more to consider.

Contact tracya@knightandcompany.co.uk or call 01628 631 056 to talk about tax planning for your business.