Overview of sole trader tax planning
Owner-Managed Businesses
Guidance
Because sole traders are the most simple trading entity possible, it is very easy to overlook them when it comes to planning work. It is often the case that planning for such clients will be done on a purely reactive basis, such as when they approach an adviser to discuss incorporation or purchasing large capital items.
However, advisers should endeavour to review all of their clients鈥� positions at least once a year.
Planning events
Determining when to conduct planning for sole traders can be challenging. There are several annual events which may dictate when best to undertake planning work and what sort it is:
| Event | Typical planning considerations |
| Accounting period end | Capital purchases Expenditure deductible when paid |
| Pension input period (PIP) end | Pension contributions (annual allowance planning) |
| Tax year end | Pension contributions (higher rate relief planning) Charitable donations Personal taxation considerations |
| Completion of accounts | Provisions Bonus accruals |
| Completion of tax return | Payment of accrued bonuses Claims and elections for relief |
| Payments on account | Reduction in payments on account |
Some
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