Darren Scott-Guinness: Keeping doctors and dentists informed with the latest economic and investment news.
As we all know, time flies. It was not so long ago that we were enjoying Christmas and New Year celebrations, and now already Easter has been and gone. Have you achieved what you set out to do in Quarter 1 of 2016? And what do you have planned for Quarter 2? Now is a great time of year to have a “spring clean” of your business and personal goals to ensure that you on track to success.
Reflecting on Q1
The end of Quarter 1 coincides with the end of the tax year (5 April) and for many doctors and dentists who own practices, it also corresponds to the end of their financial year for accounting purposes.
For everyone though, this time of year is an important milestone for financial and tax planning, where changes can be made to influence your future.
Ask yourself these questions when looking back on the last tax year and indeed Q1 of 2016:
For businesses
- Did your business make more or less profit last year?
- Is your business performing in-line with your forecasts and expectations?
- Do you have an idea of what your 15/16 tax bill will be, based on estimates from your accountant?
- Do you expect your tax bill to be higher or lower than last year?
- Are you on target to retire when you desire?
For individuals
- Are you paying the right amount of tax?
- Did you maximise your ISA allowance this year, for tax-efficient savings?
- Have you discussed Salary Sacrifice with your employer?
- Are you on target to retire when you desire?
- Are you paying the least amount of mortgage interest possible? Have you shopped around for the best rate?
Planning ahead – Q2 and beyond
With the start of the new tax year and the start of Q2, it’s a good time to revise any goals, both short and long term. In order to do this, information is the key. Here’s what to do.
Get up-to-date figures
If your business prepares financial accounts to 31 March, the first thing to do is to get the records to your accountant as soon as possible so they can crunch the numbers and let you know your profit for last year, as well as your expected tax bill. If you use another financial reporting date, your accountant can still start work on your personal tax calculation, so make contact and don’t procrastinate on this vital task.
Read more: Tax planning articles from specialist accountant, Michael Lansdell from Lansdell & Rose.
Learn from last year
Although you will still have until next year to pay your tax, the earlier you can prepare the better, as this allows you to do the following:
- Ensure you have, or will have, funds available to pay your tax when the date arrives
- Possibly reduce your payment on account in July 2016, if your tax bill for 15/16 has gone down
- And, most importantly, learn from last year and make better tax planning decisions NOW that can reduce your 16/17 tax bill
Update your business plan and personal goals
With information at hand, it gives you the power to make decisions going forward.
Keeping an up-to-date business plan and having a clear direction of where you want to be at the end of the next tax year, i.e. 1 year from now, is essential for a business to grow and thrive.
Breaking down these goals into steps and actions helps to keep you on track, so allocate tasks to Q2, Q3 and Q4 and this make achieving your longer-term goals manageable.
5 Financial planning tips for 2016/2017
Here are 5 simple things to consider for 2016/2017 for financial and tax planning.
Maximise your ISA allowances – there are several new style ISA’s which have been introduced last year so depending on what you need money for in the future, one of these may apply. The Help-to-Buy ISA is an example
Speak with a financial adviser about pension planning as it is a financial product which is always changing. A financial adviser can give advice based on your own circumstances and your individual retirement plan.
Ensure you are keeping as much of your personal income as possible, by paying the least amount of mortgage interest possible. A mortgage adviser can help you find the best rates and arrangement for you and your family.
Ensure you have an electronic system to record your business income and expenses. Ensure this system gives you monthly reports so you can keep track of your profit, and therefore your business tax in 2016/17.
Work with a specialist accountant who can provide you with proactive tax planning ideas throughout the year, focusing on minimising your future tax bills and ensuring you are not missing opportunities.
Dental & Medical Financial Services help doctors and dentists with financial and tax planning. Call Darren for expert advice.
Tel: 01403 780 770