Originally posted by oilboil
View Post
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
High profits one year, low the next; how best to manage corporation tax?
Collapse
X
-
-
Thanks very much
Thanks for all your help guys!
I think I made a basic mistake here: what I was (foggily) thinking about was somehow deferring the *revenue* from one year to the next. So in that case I could balance the revenue in different years, pay myself the allowance each year and that way pay reduced corporation tax.
I appreciate that this is probably a ludicrous proposition.
But this thread has been very helpful, the main message being that if you want to reduce tax, you need to do *tax planning*.Comment
-
Originally posted by TheCyclingProgrammer View PostAccounts are prepared on an accruals basis. Strictly speaking in the scenario above you should account for work in progress at the year end as an accrual that hasn’t been invoiced so the income for that work is recognised in the correct financial year.
I agree if you are billing a day rate (or similar style) over the accounting period - but there isn't a sensible way to apportion milestone payments as the client owes you "nowt" right up until you trigger the milestone
so either would be acceptable to Mr HMRCComment
-
Originally posted by oilboil View PostDepends how you invoice and recognise income.
If you are on a monthly gig then not a lot you can do.
If you are on a "results" or milestone gig then making the final task "spill over" into the next financial year by a couple of day means you'd be invoicing the final payment in Y2 not Y1 - hence reducing Y1 income and increasing Y2 income
Unless you care about the "vanity" of always making a profit it doesn't make a blind bit of difference in the end. You pay 19% tax on profit (this year and next at least - can change in the future). When you earn it just affects when you pay it - that's the only differenceComment
-
Originally posted by oilboil View PostNot if the money only becomes payable on completion as you cannot guarantee that you will complete the work.
I agree if you are billing a day rate (or similar style) over the accounting period - but there isn't a sensible way to apportion milestone payments as the client owes you "nowt" right up until you trigger the milestone
so either would be acceptable to Mr HMRCComment
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Comment